Madison-based Fairway Independent Mortgage Corp. appears to be the latest mortgage lender to cut jobs due to the challenging origination market, showing that surging mortgage rates and home prices are now affecting companies with a high share of purchase loans in their portfolios.
Fairway staff across the country received phone calls last week from their supervisors announcing they were part of a round of layoffs, a dozen former employees told HousingWire over the last few days. However, no WARN Notices were found in the states where these employees work.
A spokesperson for Fairway would not provide any comment, including any comment on whether there were layoffs or the number of employees involved. According to its website, Fairway employs more than 9,000 team members, including more than 2,800 producers and over 750 branch and satellite locations in the U.S.
Six months ago, Fairway was in a more comfortable position than its rivals: purchase loans accounted for almost 62% of the company’s total origination in 2021, the highest share among the top 12 lenders in the U.S, according to Inside Mortgage Finance.
At that point, lenders focused on originating refinance loans, such as Better.com and Interfirst, announced workforce reductions as interest rates started to increase – higher rates usually reduce borrowers’ incentives to refi their mortgage.
But this year, Fairway started to feel the consequences of mortgage rates at 5.25% and surging house prices. According to the Mortgage Bankers Association (MBA), these two factors are weighing on purchase loans as some buyers put the American dream of homeownership on standby.
Consequently, Fairway’s origination volume reached $12.6 billion from January to March, down 24% quarter over quarter and 33.5% year over- year. Still, according to the IMF data, the company was the 12th-largest mortgage lender in the country in the first quarter of 2022.
Fairway’s workforce reduction included the wholesale and retail channels, from analyst to senior positions such as underwriting, training, and information technology. The layoffs included professionals with more than two years working for the company as well as some that started there less than four months ago.
The lender offered a two-week severance payment for some employees but no career transition support. Most of the employees reported the company locked up their computers on the same day they received the phone call.
“I was given a call in the morning by my supervisor who said: ‘I’m sorry, but you are included in a list of layoffs. And it has nothing to do with your performance. It is strictly a financial decision’,” said a former employee who prefers not to be identified.
Another former employee who prefers anonymity added: “We received about three hours’ notice before our computers were locked up.”
The former employees created a group on LinkedIn to share their experiences and are organizing Zoom meetings every morning to support each other during the transition in their careers. HousingWire attended one meeting on Wednesday, when 10 professionals participated.
“Our goal is to help people increase their network of connections, review their resumes, practice their interview techniques, and give emotional support,” said a former employee who joined the group.
Founded in 1996 by Steve Jacobson, Fairway has its corporate headquarters in Madison and a large office in the Dallas area – the latest is where the technology team, strongly affected by the workforce reduction, is located.
However, over the last couple of years, the company hired people from anywhere in the country for remote work, according to the former employees. Some of the laid-off professionals had never been to a physical corporate office, they told HousingWire. They are from states such as Arizona, California and Florida.
Fairway received attention in March 2021 when United Wholesale Mortgage (UWM), the top wholesale lender in the nation, announced that it would no longer partner with brokers working with Rocket Mortgage or Fairway, which has divided the broker community into two camps.
In a highly competitive market, lenders are cutting costs, mainly via layoffs. California-based Owning Corp., a direct-to-consumer lender acquired by Guaranteed Rate in February 2021, cut 108 jobs in three rounds from February to April. And it intends to add another 81 layoffs to the list. Other lenders also have reduced staff, such as Interfirst, Mr. Cooper, Union Home Mortgage, Flagstar, Wells Fargo and Better. Rocket has not laid off workers but has offered a voluntary buyout to some of its staff.