Modern Lending

LendIt USA March 2017

Today & Tomorrow

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Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 ' 13 Q3 '13 Q4 '13 Q1 '14 Q2 ' 14 Q3 '14 Q4 '14 Q1 '15 Q2 ' 15 Q3 '15 Q4 '15 Q1 '16 Q2 ' 16 Q3 '16 Q4 '16

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loanDepot, by the Numbers▪ HQ in Foothill Ranch, CA▪ 5,600 employees▪ Launched in 2010; profitable since 2012

$38 billionoriginated in

FY2016

71% originations CAGR

for 2010-2016

$230 millionestimated marketing

spend in FY2017

1,700+ licensed lending

officers

2ndlargest non-bank consumer lender

Cumulative Originated Volume Since Launch ($Bn)

▪ Completed 3 acquisitions to date ▪ Privately held ▪ First post-crisis platform to offer mortgage, home equity

and personal loans products

Total U.S. Consumer Debt Outstanding ($T)

Post-Crisis Consumer Credit Demand Cycle

Source: Federal Reserve Bank of New York.

$10.0

$10.8

$11.5

$12.3

$13.0

2007 2008 2009 2010 2011 2012

$11.3$11.5

$11.7

$12.2

$12.7

$12.4

Total U.S. Consumer Debt Outstanding ($T)

Post-Crisis Consumer Credit Demand Cycle

Source: Federal Reserve Bank of New York.

$10.0

$10.8

$11.5

$12.3

$13.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$12.6

$12.1

$11.8

$11.5$11.3

$11.5$11.7

$12.2

$12.7

$12.4

$10.0

$10.8

$11.5

$12.3

$13.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$12.6

$12.1

$11.8

$11.5$11.3

$11.5$11.7

$12.2

$12.7

$12.4

Total U.S. Consumer Debt Outstanding ($T)

Post-Crisis Consumer Credit Demand Cycle

launches Jan 2010

Source: Federal Reserve Bank of New York.

$10.0

$10.8

$11.5

$12.3

$13.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$12.6

$12.1

$11.8

$11.5$11.3

$11.5$11.7

$12.2

$12.7

$12.4

Total U.S. Consumer Debt Outstanding ($T)

Post-Crisis Consumer Credit Demand Cycle

launches Jan 2010

Source: Federal Reserve Bank of New York.

79%

71%

Mortgage Debt as a % of total U.S. Consumer Debt

$10.0

$100.0

2006 2015

$12.4$13.0

Consumer Credit Demand, Another Angle

Source: Cash-out Refinance data from Black Knight Financial Mortgage Monitor Report, Oct. 2016. Home Equity data from inside Mortgage Finance. Household Equity value data from Federal Reserve Bank of NY.

Despite a recovery in household equity values to near pre-crisis levels, equity extraction has not returned

U.S. Household Equity Balances ($T)

$10.0

$100.0

2006 2015

$12.4$13.0

Consumer Credit Demand, Another Angle

Source: Cash-out Refinance data from Black Knight Financial Mortgage Monitor Report, Oct. 2016. Home Equity data from inside Mortgage Finance. Household Equity value data from Federal Reserve Bank of NY.

2006 2015

$64

$315

$183

$430

Home Equity LoansCash-Out Refinance$745

$247

~$500 billionVariance

U.S. Household Equity Balances ($T) U.S. Household Equity Extraction ($Bn)

Despite a recovery in household equity values to near pre-crisis levels, equity extraction has not returned

What factors brought us here?

Post-Crisis Credit Supply Drivers

Regulation

Post-Crisis Credit Supply Drivers

Regulation Capital Markets

Post-Crisis Credit Supply Drivers

Regulation Capital Markets Technology

Regulation Has Driven Banks Out of Lending

Non-bank platforms highlighted

Top 10 Retail Home Loan Lenders: 2013 vs. TodayRegulation

FY 2013

# Lender $ Orig Market Share

1. Wells Fargo $199.7 10.8%

2. Chase, NJ $90.7 4.9%

3. Bank Of America Home Loans, NC $89.8 4.9%

4. Quicken Loans Inc., MI $71.0 3.8%

5. Citi, MO $53.7 2.9%

6. U.S. Bank Home Mortgage, MN $20.7 1.1%

7. SunTrust Mortgage Inc., VA $16.4 0.9%

8. Guaranteed Rate Inc., IL $15.9 0.9%

9. PNC Mortgage, OH $15.1 0.8%

10. Fifth Third Bank, OH $12.0 0.6%

Total Top 10 # $584.9 31.7%

Non Banks within Top 10 2 $86.9 4.7%

Total Market Originations $1,844.9 100.0%

($'s in billions)

FY 2016

# Lender $ Orig Market Share

1. Wells Fargo $130.1 6.9%

2. Quicken Loans Inc., MI $95.7 5.1%

3. Bank of America Home Loans, NC $64.2 3.4%

4. Chase, NJ $58.1 3.1%

5. loanDepot.com, CA $32.4 1.7%

6. Freedom Mortgage Corp., NJ $24.7 1.3%

7. Citi, MO $23.2 1.2%

8. Guaranteed Rate Inc., IL $22.7 1.2%

9. U.S. Bank Home Mortgage, MN $18.6 1.0%

10. Fairway Independent Mortgage $16.3 0.9%

Total Top 10 # $486.0 25.7%

Non Banks within Top 10 5 $191.7 10.1%

Total Market Originations $1,891.0 100.0%

Source: Inside Mortgage Finance, market sizes from Mortgage Bankers Association. PHH Mortgage excluded from Retail ranking due to B2B / outsourcing model. Quicken retail volume assumes 90% total volume in 2013.

Private Capital Hasn’t Re-entered the Housing System

US Residential MBS Issuance ($T)

Source: Securities Industry and Financial Markets Association.

Capital Markets

$0.0

$0.8

$1.5

$2.3

$3.0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$1.7$1.4

$1.1

$1.7$1.8

$1.3

$1.5$1.8

$1.2

$2.0$2.2$2.2$1.9$2.8$1.9

$1.4

$0.6

$0.9$1.0

$0.5$0.5

US Residential MBS Issuance ($T)

Source: Securities Industry and Financial Markets Association.

$0.0

$0.8

$1.5

$2.3

$3.0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Agency (GSE’s & GNMA)

Non-Agency

Capital Markets

Private Capital Hasn’t Re-entered the Housing System

$0.0

$0.8

$1.5

$2.3

$3.0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

US Residential MBS Issuance ($T)

96 - ‘07 08 - ‘16

Average Annual Issuance ($T) $1.5 $1.5

Agency Share 64% 96%

Non- Agency Share 36% 4%

Source: Securities Industry and Financial Markets Association.

Agency (GSE’s & GNMA)

Non-Agency

Capital Markets

Private Capital Hasn’t Re-entered the Housing System

Innovation Has Focused on Consumer Asset Classes

“Alternative Lending” Market Map – March 2017 Technology

Source: Financial Technology Partners.

Innovation Has Focused on Consumer Asset Classes

“Alternative Lending” Market Map – March 2017

Targeting 29% of total addressable consumer market

Targeting 71% of total addressable consumer market

Technology

Source: Financial Technology Partners.

Innovation Has Focused on Consumer Asset Classes

“Alternative Lending” Market Map – March 2017

Targeting 29% of total addressable consumer market

Targeting 71% of total addressable consumer market

Technology

Compartmentalization will lead to consolidationSource: Financial Technology Partners.

Looking Ahead – Will It Matter?

$12.6 Trillion Consumer Debt Outstanding

When - not if - innovation and private capital return to the housing market, lenders who can pivot between both will enjoy marketing & scale efficiencies

not available to mono-line lenders

Other

Student

Credit Card

Auto

29%

71%Mortgage & Home Equity

Average Borrower Profile By Product

Home Loans Personal Loans

Loan Amount $274,000 $16,833

Coupon % 3.88% 14.76%

Borrower Age 49 51

Borrower FICO 724 720

Borrower Income $82,500 $82,300

Homeownership % 100% 95%

Home LTV 77% n/a

LD Personal Loans: Early Lessons

Average Borrower Profile By Product

Technology

Regulation

Capital Markets

New administration expected to soften regulation, but extent and timing unknown

Regardless, compliance will continue to need to be a core competency for companies

Non-banks must follow the money-supply

Category leaders will have competitive advantage in accessing capital

Home loan market will be disrupted

Technology will become greater barrier to entry over time

Regulation

Capital M

arketsTechnology

Where Do We Go From Here?What we do know…

What We Don’t Know…

What We Don’t Know…

What We Don’t Know…

How to Plan for an Unknown Future

Thank You