loanDepot, Inc.LDI
loanDepot, Inc. Commitments Disclosure
COMMITMENTS AND CONTINGENCIES
Escrow Services
In conducting its operations, the Company, through its wholly-owned subsidiaries, LDSS and ACT, routinely hold customers' assets in escrow pending completion of real estate financing transactions. These amounts are maintained in segregated bank accounts and are offset with the related liabilities resulting in no amounts reported in the accompanying consolidated balance sheets. The balances held for the Company’s customers totaled $78.2 million and $17.5 million at December 31, 2025 and 2024, respectively.
Legal Proceedings
The Company is a defendant in, or a party to, legal actions related to matters that arise in connection with the conduct of the Company’s business. The Company operates in a highly regulated industry and is routinely subject to examinations, investigations, subpoenas, inquiries and reviews by various governmental and regulatory agencies. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory proceedings utilizing the latest information available. The Company accrues for estimated losses when they are probable to occur and such losses are reasonably estimable. Any estimated loss is subject to significant judgment and is based upon currently available information, a variety of assumptions, and known and unknown uncertainties. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued. Based on the Company’s current understanding of pending legal and regulatory actions and proceedings, management does not believe that possible losses in excess of the amounts accrued arising from pending or threatened legal matters, individually or in the aggregate, will have a material adverse effect on the consolidated financial position, operating results or cash flows of the Company. However, unfavorable resolutions could affect the Company’s consolidated financial position, results of operations or cash flows for the period in which they are resolved.
Cybersecurity Incident
The Company is cooperating with various state regulators and attorneys general regarding ongoing investigations into the Cybersecurity Incident. While the ultimate dispositions of the investigations are not yet determinable, the Company does not believe that a loss is reasonably estimable in these matters at this time.
Employment Litigation
On September 21, 2021, a former senior operations officer filed a complaint, as subsequently amended, with the Superior Court of the State of California, County of Orange. The complaint originally named the Company, an executive officer, and a former executive officer as defendants, and alleged loan origination noncompliance and various employment-related claims, including hostile work environment and gender discrimination. The claims against the two executive officers were dismissed by the court in 2022. Plaintiff's claims regarding improper origination of loan documents, gender discrimination and several other ancillary employment claims were dismissed as a result of several pre-trial motions filed on behalf of the Company. On February 7, 2025, a unanimous jury returned a verdict in favor of loanDepot regarding the remaining claims in the litigation. Plaintiff filed a notice of appeal of the jury verdict on April 15, 2025. To date, including $571,000 on February 2, 2026, the court has awarded loanDepot approximately $750,000 for attorneys’ fees and other costs as sanctions against the plaintiff and her counsel for bringing frivolous claims and engaging in other inappropriate conduct. The Company does not believe that a loss is probable or that the amount of loss is reasonably estimable in this matter at this time.
Telephone Consumer Protection Act Class Actions
The Company is a defendant in multiple putative class action lawsuits alleging violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), related to marketing and customer communications. Of these actions, Jeffrey Kearns v. loanDepot.com, LLC (“Kearns”), filed in June 2022 has been certified as a class action and is pending in the in the United States District Court for the Central District of California. The remaining actions are in various stages of litigation and have not been certified as classes. Absent class certification, the Company believes these other actions are ordinary routine litigation matters incidental to our business. Kearns seeks actual and statutory damages under the TCPA, injunctive relief, and
attorneys’ fees and costs. The Company believes it has substantial defenses to the Kearns lawsuit and it continues to vigorously defend against it. The Company does not believe that a loss is reasonably estimable in Kearns at this time.
Truth in Lending Act Class Action
In July 2025, five loanDepot borrowers filed a putative class action lawsuit in the United States District Court for the District of Maryland. The lawsuit alleges that the Company violated the Truth in Lending Act (“TILA”) by requiring loan officers to transfer retail borrowers’ loans to Internal Loan Consultants in certain circumstances and reducing the compensation those loan officers received on those loans. The Company believes it has substantial defenses to this lawsuit, and it continues to vigorously defend against it. The Company does not believe that a loss is probable or that the amount of loss is reasonably estimable in this matter at this time.
Antitrust Class Action
In October 2025, a group of borrowers, none of which have loans with loanDepot.com, LLC, filed a putative class action lawsuit in the United States District Court for the Middle District of Tennessee against mortgage technology software provider Optimal Blue and 29 lender-users of its software, including loanDepot.com, LLC. The lawsuit alleges that the defendants violated Section 1 of the Sherman Act by conspiring with each other to exchange competitively sensitive information through the use of such software, allegedly reducing competition and in turn increasing mortgage costs. On February 23, 2026, the plaintiffs filed an amended complaint that did not name loanDepot.com, LLC.
Privacy Class Action
In December 2025, a putative class action lawsuit was filed in the Superior Court of California, County of Alameda, against loanDepot.com, LLC, alleging that certain cookies and other “tracking technologies” collected website activity data even if visitors declined consent using the “Cookie Preferences” tool. The lawsuit alleges violations of the California Invasion of Privacy Act (“CIPA”), breach of contract, and violation of the California Unfair Competition Law. The complaint seeks actual and statutory damages under the CIPA, equitable relief, credit monitoring for the class, and attorneys’ fees and costs. The Company believes it has substantial defenses to this lawsuit and will vigorously defend against it. The Company does not believe that a loss is probable or that the amount of loss is reasonably estimable in this matter at this time.
Commitments to Extend Credit
The Company enters into IRLCs with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose the Company to market risk if interest rates change and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the customer does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans as of December 31, 2025 and December 31, 2024 approximated $2.5 billion and $1.8 billion, respectively. These loan commitments are treated as derivatives and are carried at fair value, refer to Note 6 - Derivative Financial Instruments and Hedging Activities for further information on derivatives.
Loan Loss Obligation for Sold Loans
When the Company sells mortgage loans, it makes customary representations and warranties to the purchasers about various characteristics of each loan such as the 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. The Company establishes a loan repurchase reserve for losses associated with repurchase loan obligations if the Company breached a representation or warranty given to the loan purchaser. Additionally, the Company’s loan loss obligation for sold loans includes an estimate for losses associated with early payoffs and early payment defaults. Charge-offs associated with early payoffs, early payment defaults and losses related to representations, warranties, and other provisions are also included.
The activity related to the loan loss obligation for sold loans is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at beginning of period | $ | 18,417 | $ | 31,980 | $ | 70,797 | ||||||||||||||
Provision (recovery) for loan loss obligations | 8,734 | (6,348) | 8,179 | |||||||||||||||||
| Charge-offs | (11,035) | (7,215) | (46,996) | |||||||||||||||||
| Balance at end of period | $ | 16,116 | $ | 18,417 | $ | 31,980 | ||||||||||||||
Obligation for Sold MSRs
The Company recognizes sales of mortgage servicing rights as sales if title passes, substantially all risks and rewards of ownership have irrevocably passed to the purchaser, and any protection provisions retained by the Company are minor and can be reasonably estimated. If a sale is recognized and only minor protection provisions exist, a liability for the estimated obligation associated with those provisions is recorded in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. The Company establishes a reserve related to the reimbursement of the purchase price for any loans that are prepaid in full within 90 days of the MSR sale transaction. The obligation for sold MSRs was $0.6 million and $2.9 million as of December 31, 2025 and December 31, 2024, respectively
TRA Liability
As part of the IPO and reorganization, the Company has entered into a TRA with Parthenon Stockholders and certain Continuing LLC Members, whereby loanDepot, Inc. will be obligated to pay such parties or their permitted assignees, 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 future tax benefits from increases in tax basis. The TRA liability is accounted for as a contingent liability with amounts accrued when deemed probable and estimable. The Company recognized a TRA liability of $109.1 million and $80.2 million as of December 31, 2025 and 2024, respectively, which represents the Company’s estimate of the aggregate amount that it will pay under the TRA as a result of the offering transaction. The amounts payable under the TRA will vary depending on several factors including the number of LLC units exchanged for Class A common stock, the amount of taxable income attributable to loanDepot, Inc., and the Company’s ability to realize the tax benefits in a given year. Refer to Note 19 - Related Party Transactions for further detail on the payments.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 18, 2022 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.