Growing pains for SoFi? Online lender lays off mortgage staffers

Cutting 5% of its total staff

It appears that SoFi is suffering a bit of growing pains as it pushes to expand its mortgage lending operation.

Last week, Bloomberg reported that SoFi was buying the engineering and product teams of Clara Lending, a mortgage startup founded in 2010.

But as those new staffers come in, other staffers are being let go.

The Wall Street Journal (and the San Francisco Business Times) reported this week that SoFi is laying off approximately 5% of its workforce, with the layoffs coming from the company’s mortgage division.

From the WSJ report:

The San Francisco-based financial-technology company told staffers on Tuesday it is cutting around 65 jobs, roughly 5% of its 1,300-person workforce, the people said. The layoffs are centered in SoFi’s mortgage-operations centers in Healdsburg, Calif., and Cottonwood Heights, Utah.

A SoFi spokesman said the company “made some changes to staffing to ensure we have the right people in the right roles and locations to power our growth.” He added that SoFi is currently looking to fill more than 175 open jobs.

The layoffs come on the heels of SoFi naming Twitter Chief Operating Officer Anthony Noto the company’s new CEO.

Noto replaces Mike Cagney, who abruptly resigned as CEO back in September with the company embroiled in controversy surrounding sexual harassment allegations.

Noto will take over as CEO and join SoFi’s board of directors on March 1, and he has a chore ahead of him to get SoFi back on firmer footing.

Over the last few years, SoFi transitioned from specializing in student loans into becoming one of the largest online residential mortgage retailers.

In 2016, SoFi shook up the mortgage business when it announced a partnership with Fannie Mae, which included a new loan option that allows homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.

Last year, SoFi announced its intentions to break into banking by applying for a bank charter under the name SoFi Bank in Utah.

That move was met by resistance from other banks and members of Congress, but the plan was abandoned, after Cagney stepped down amid complaints about sexual harassment at the company.

SoFi’s alleged toxic culture was the focus of national news coverage, which placed Cagney at the center of the issues. 

At the time, the company was dealing with claims that the company fired a former employee for reporting sexual harassment allegations to his superiors.

The former employee, Brandon Charles, formerly a senior operations manager at SoFi, said in a lawsuit that he witnessed his female colleagues being harassed by managers.

SoFi was once the apple of investors’ eye, including raising $500 million last year in its Series F financing led by Silver Lake. That capital raise came roughly 18 months after SoFi raised $1 billion, led by SoftBank. At the time, the capital raise was the largest single financing round in the fintech space to date.

Now, it’s up to Soto to bring that feeling back.

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