A force reduction of about 4,000 workers since December apparently wasn’t enough to stop the bleeding for Better.com. The digital lender on Tuesday morning announced that it would be executing its third major layoff, though it did not disclose how many workers would be shown the door.
Sources familiar with the layoffs said it would be “significant” and felt across the company’s divisions, including at Better Real Estate, a brokerage-like venture the company launched last year to get closer to purchase buyers who had not hired an agent. Better hired real estate agents on salary instead of commission, similar to Redfin’s model.
Richard Benson-Armer, the company’s chief people, performance and culture officer, told employees in a Tuesday morning email viewed by HousingWire that the cut was “substantial” and was “not the measure we wanted to take.”
“As the mortgage environment in which we operate continues to indicate further declines ahead, we have to do more to ensure Better is appropriately positioned, financially and operationally, to navigate this changing environment,” he told workers.
Better.com said it will pay workers a minimum of 60 days in severance – some as much as 80 days – and will cover COBRA premiums until the end of July.
“We continue to prioritize transparency and care as we go through this process, and our leaders will be spending today making one-on-one calls to notify departing colleagues of this news,” Benson-Armer wrote to employees. “If you are impacted, you will receive a call today to learn the news personally and discuss next steps.”
With refinance volumes anticipated to decrease by 62% this year and many originators experiencing layoffs, lenders are looking for a way to diversify their offerings with non-QM products and gain new business in order to maintain profits.
Presented by: Acra Lending
Earlier this month, Better.com, which turned a profit during the refi boom but has not managed to get a toehold with purchase business as mortgage rates climbed to 5%, asked employees to voluntarily quit. It’s unclear how many took Better up on the offer.
A Better spokesperson declined to comment beyond what was in the letter.
The company’s chief executive officer Vishal Garg gained infamy in December when he laid off 900 employees in a Zoom meeting and then criticized the departing employees to remaining workers. In early March, Better laid off another 3,000-plus workers, some of which work in India. Laid off employees discovered they were going to be out of a job when a severance check hit their payroll provider’s app.
Better.com’s financial backer, SoftBank, made a $750 million cash infusion last year, out of a total $1.5 billion in committed funding. The remaining $750 million would be doled out after the company goes public via a special purpose acquisition company, known as Aurora Acquisition Corp.
But without reliable access to purchase business, conditions look bleak for Better, and few, if any, Wall Street analysts believe Better can go public in this cycle. The lender reported losses between $167 million to $182 million in the fourth quarter and expects to lose money again in the first quarter of 2022.