LoanDepot and its agent matching subsidiary, mellohome, will offer cash rebates of up to $7,000 on bundled services when clients buy and sell with a mellohome preferred real estate agent, finance with loanDepot, and choose the company’s title insurance services.
The loanDepot “Grand Slam package,” an allusion to the company’s sponsorship deals with Major League Baseball and the Florida Marlins, will be available nationwide starting Oct. 1 — just in time for the 2021 World Series. LoanDepot will also be the “presenting sponsor” of the MLB American and National League Championship Series.
LoanDepot “is more than a mortgage company,” said CEO Anthony Hsieh in a statement. “We’re a digital commerce company committed to serving our customers throughout the homeownership journey.”
The California-based lender operates three ancillary businesses:
- Mello Home Services LLC, a captive real estate referral business launched in 2018
- LD Settlement Services LLC, loanDepot’s captive title and escrow business, which the company acquired in 2016
- MelloInsurance Services LLC, a captive insurance program launched in the third quarter of 2020 to sell homeowners and other insurance policies
The cash rebate of up to $7,000 is available to clients who both buy and sell with a mellohome agent, and choose bundled services. The size of the rebate will depend on the home purchase or sale price. To get the full $7,000, purchases and sales must be $500,000 or more. The rebate is $5,000 for purchases and sales of $200,000 to $499,999, or $3,000 for sales of $199,999 and under.
Buyers who use a mellohome preferred real estate agent and finance through loanDepot can earn rebates of up to $3,500, as can sellers who list with a mellohome agent. The rebates are not available in Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon and Tennessee.
The Real Estate Settlement Procedures Act (RESPA) governs business referrals “related to or part of settlement services involving federally related mortgage loans.”
Kickbacks for referrals are illegal, but mortgage lenders with affiliated title and escrow companies are permitted to sell “a package of settlement services at a discount,” the Consumer Financial Protection Bureau, which enforces RESPA, notes on its website. Consumers can’t be required to purchase bundled services, and each company must also make those services available separately.
“A large portion of our purchase-oriented customer leads have not yet selected a realtor, thus affording us the opportunity to provide a more integrated customer service between the two key home-buying functions, as well as capture ancillary revenue in a RESPA-compliant manner,” loanDepot noted in its most recent annual report to investors.
LoanDepot, which went public in February, was the nation’s fourth-largest mortgage lender last year, according to disclosures filed with federal regulators and analyzed by iEmergent. Like many lenders, loanDepot did booming business in refinancing, as existing homeowners took advantage of lower rates driven by the Federal Reserve’s ongoing debt purchases launched during the pandemic.
That trend has continued this year, with refinancings accounting for 81 percent of the $41.5 billion in loans the company originated during the first quarter of 2021, the company said in its most recent quarterly report to investors. While purchase loan originations were up by 80 percent in the first three months of the year, to $7.9 billion, refinancings grew by 211 percent, to $33.6 billion.
To bolster its purchase loan business, in recent months loanDepot has formed joint ventures with homebuilders LGI Homes, Schell Brothers, and Brookfield Residential, and last month announced a joint venture with Farm Bureau Bank.