California mortgage jobs market takes a hit
Two lenders scale back in The Golden State
The industry continues to prune mortgage operation branches in attempts to offset rising rates and impending regulations, with both Rushmore Loan Management Services and SunTrust Mortgage filing layoff notices in California.
Rushmore Loan announced its plan to cut 101 employees by the end of the year in a Worker Adjustment and Retraining Act filing with the state. But it is not an issue localized to California. There are many factors impacting mortgage business nationwide. Currently, the average 30-year, fixed-rate mortgage sits at 4.44%, compared to 3.59% in May 2013.
As a result, the rising rates have brutally impacted refinance applications, with spiking mortgage rates taking a big chomp out of applications and smaller nibbles out of sales later, Trulia's (TRLA) chief economist Jed Kolko said. Many mortgage firms are instead focusing on purchase mortgage applications, though there are some contractions being felt in that arena as well.
“Over the last few months, the mortgage industry in general and Rushmore Home Loans in particular have experienced a significant decline in mortgage origination volume," said Hope Margarit, director of marketing and communications with Rushmore.
"With an overall industry slowdown expected to continue into 2014, the company was forced to right-size the organization. We are sorry to lose so many dedicated and talented employees, but this is a necessary step to ensure the overall strength of the organization in light of weaker market conditions," Margarit added.
As HousingWire reported on Nov. 15, Rushmore Loan recently received approval to act as a Freddie Mac seller/servicer, strengthening the companies business.
Meanwhile, SunTrust’s layoffs fall in the with the lender’s previous announcement to cut 800 jobs nationwide in mid-October and plans to eliminate 89 positions in Irvine, Calif.
SunTrust notes that a majority of the positions being eliminated in California are in the mortgage broker lending business, which the firm revealed plans to exit, effective Dec. 31.
SunTrust chose to back away from broker lending to instead focus on areas where the firm can be more competitive. This scaling back of mortgage business is expected to continue at-large, with new regulations right around the corner. Experts are predicting mortgage firms will lose business in the face of said rulemaking.
For example, the effective date for the Qualified Mortgage rule is Jan. 10.
“These new requirements, although designed to protect and treat all homebuyers equally and protect the industry from risky lending practices of the past, may actually eliminate lending options for a significant amount of otherwise qualified homebuyers," said Marcus McCue, executive vice president at Guardian Mortgage, in a recent article appearing on HousingWire’s REwired blog.
McCue said in some cases, mortgage firms could miss out on half the amount of business they would otherwise generate.