Anthony Hsieh started tracking COVID-19 in early February, sensing it could be a game changer.
When the coronavirus struck the U.S. in March, Hsieh quickly decided to send all 7,000 employees at loanDepot.com LLC to work from their homes. His Foothill Ranch-based mortgage company bought 3,000 laptops within 72 hours.
“It was not a drill,” he recalled.
“It’s a real-life event with serious consequences. We didn’t know what was going to happen.”
Then a surprise occurred—business began booming.
After the credit market froze and the equity market collapsed, the Federal Reserve slashed interest rates, encouraging a frenzy of mortgage refinancing.
The company that Hsieh began in 2010 went on a hiring spree, adding 3,000 employees. He said productivity has never been better.
It wasn’t all smooth sailing for one of Orange County’s wealthiest execs.
Hsieh, who often wakes at 4:30 a.m., himself caught the virus in July. He suffered but recovered (see story, page 22), and was able to host his annual War Heroes on Water fishing tournament in late September.
“Life is wonderful, but it’s different today,” said Hsieh, whose business successes, hiring efforts and philanthropy work earned him a nod as the Business Journal’s Business Person of the Year, in the finance sector.
The past year’s events have given Hsieh some time for contemplation—no small feat for the hard-charging executive, who doesn’t have time for small talk.
“We’re all in this feeling of limbo because of COVID. The post-COVID world is unknown. There’s definitely lots of self-reflection.”
IPO Eyed
In May, Hsieh predicted sales might jump 50% to more than $2 billion. In a Dec. 21 interview, he declined to provide a new estimate.
The reason is loanDepot in November said it “has confidentially submitted” a draft statement to the Securities and Exchange Commission for a proposed public offering.
Earlier this year, Hsieh watched larger competitor Rocket Companies Inc., parent of Quicken Loans, go public by raising $1.8 billion. The Detroit-based company, the only non-bank mortgage lender larger than loanDepot, now has a $41 billion valuation.
Since Rocket’s sales are expected around $10 billion this year, a similar valuation of four times sales could put loanDepot’s valuation around $8 billion, which would make it around the sixth most valuable publicly traded company in Orange County.
“Absolutely no comment” on the valuation, Hsieh laughed when speaking to the Business Journal in late December. “Nice try.”
Given his track record, expect any IPO to be a successful one, say industry watchers.
“You cannot take anything away from the guy,” said Paul Muolo, an editor at Insider Mortgage Finance, a well- respected newsletter that tracks the mortgage industry.
“He’s going up against formidable players like Wells Fargo and Rocket.”
Taiwanese Immigrant
Hsieh, who was born in Taiwan, immigrated at age 8 with his parents to the U.S. and grew up in Fullerton. He described himself as “a terrible student” while earning a business degree at California State University-Fullerton.
At 21, he became a mortgage lender, taking his first loan application on a typewriter. Four years later, he bought out the owners of his company, changing the name to loandirect.com, which he said was the world’s first internet-based financial services company. He sold it in 2001 to E-Trade Financial Corp. for shares worth about $51.5 million.
At 35, he had every intention of retiring and spending his time fishing, a life-long passion. Instead, he founded HomeLoanCenter.com, selling it for an undisclosed price to IAC/Interactive Corp., which merged it into Lending Tree.
Hsieh worked there for three years, and when he left, he had a noncompete clause of more than two years. While he chafed at the restriction, it turned out to be fortuitous because he was able to avoid the 2008 financial crisis, which devastated numerous mortgage firms.
In 2010, he started loanDepot as “a way to do something.” He didn’t have an idea it would become “a monster of a company.”
Since then, it’s generated more than $275 billion in loans and now has 10,200 employees.
Hsieh, who is known for frankness on his LinkedIn postings, lamented in November that “Being big does not mean you can be big and stupid. Right now, I don’t feel very smart with the 10k people size company. Ugh.”
When asked about this post, Hsieh said the company’s experienced growing pains by adding 3,000 people within a seven-month period.
“Sometimes, it’s not as tight as you need it to be,” he said. “As an entrepreneur, the expectation was at a higher level. We needed to tighten the ship a bit.”
2nd Try?
In 2015, loanDepot first filed for an IPO.
“Anthony pulled it back because he didn’t like the valuation,” said Inside Mortgage Finance’s Muolo. “Here he is again. I’d assume he’s not backing out.”
That 2015 filing revealed his ownership at 51.5%. The Business Journal in mid-2020 estimated his wealth around $2.3 billion, a figure that could prove to be on the low side if the latest IPO plans move ahead.
After canceling the 2015 IPO, he spent more than $80 million on a new technology system called Mello that speeds the time to get mortgage approval. It’s a big reason he touts loanDepot as more of a financial technology company than a mortgage play.
“Rocket and loanDepot have become the Uber and Lyft of the non-banking industry,” Hsieh said, adding that the two own 14% of the market share for non-bank lenders.
One thing he’s declined to discuss is whether loanDepot will retain its headquarters in Foothill Ranch or even Orange County.
One positive indicator could be that last October, it was revealed he spent $61 million to buy a mansion in Crystal Cove; it’s the most expensive home purchase in OC’s history.
Another sign is he plans to double the size of his locally-based War Heroes on Water tournament later this year to help 100 injured vets.
Full Speed Ahead
The mortgage industry is clearly on a tear.
Rick Arvielo, co-founder and CEO of Tustin-based New American Funding, in September told the Business Journal that he expects three to four more years of high demand, saying there is about $11 trillion in debt that could be turned over and refinanced, but the industry has the capacity to only finance $3 trillion a year.
Hsieh noted demand “is completely driven by the interest rate level,” adding that the government has indicated rates will stay low for one to three years.
Hsieh sees 2021 as “very exciting” with record low interest rates and increasing real estate prices. He’s considering waiting until the second half of the year to bring employees back to the office.
“My job is to be well prepared,” he said. “LoanDepot is positioned to do incredible things.”
