New American Funding, no longer in growth mode, lays off 240

Most recent layoff round primarily affected mortgage originations pros

California lender New American Funding issued pink slips to 240 employees last week, bringing the total cut this year to nearly 1,000. The force reductions come after two years of rapid expansion.

“The mortgage market slowdown is unfortunately affecting our entire industry,” Rick Arvielo, CEO of New American Funding, told HousingWire in a statement. “It is our duty as stewards of this company to ensure that we are properly positioned and able to responsibly navigate the current marketplace.”

Arvielo said the company made the difficult decision to make layoffs “as part of an effort to align our company for continued success now and in the future.”

A total of 941 NAF employees have been laid off this year “as part of an effort to right size the company based on the state of the mortgage industry,” the California-based lender said in a statement.

Worker Adjustment and Retraining Notification notices were not triggered in the most recent force reduction, and the company did not comment on whether employees were provided a severance package. 

Founded in 2003 by Rick Arvielo and his wife Patty Arvielo, New American Funding offers a variety of conventional, government, adjustable-rate and non-qualified mortgages. Licensed in Washington, D.C. and 50 states, the lender has 157 active branches nationwide, according to the NMLS.  

How to stay competitive with specialty mortgage products heading into 2023

HousingWire recently spoke with Lee Smith and John Gibson at Flagstar Bank about what originators can do to align their products and services with the ebb and flow of the housing market.

Presented by: Flagstar

New American Funding ranked as the 31st largest lender in the country, originating $12.3 billion through the first three quarters of 2022, which was down 46.1% from last year, according to data from Inside Mortgage Finance. In 2021, the lender originated $29.3 billion in volume. 

When mortgage rates were at all-time low levels and business was booming, the company expanded significantly. It added more than 1,300 employees in 2021 and hired about 2,800 people the previous year, according to a company press release touting its inclusion on the Inc. 5000 list in August 2021.

Like other mortgage lenders who have struggled to stay in the black in a margin-compressed environment, New American Funding has laid off employees across multiple rounds, including an elimination of 300 positions in August. Heavily impacted were mortgage operations positions including loan originators, mortgage underwriters, processors and training specialists. 

Economists at the Mortgage Bankers Association forecast total origination volume to drop about 48% from last year to $2.3 trillion in 2022 and similar levels over the next two years.

If the industry experiences a 65% drop in origination volume from the peak in the fourth quarter of 2020 to a trough in the first quarter of 2023, the MBA expects production employment will likely need to be scaled back by 24 to 31%. Only between 2% and 10% has been reduced as of the second quarter of 2022, the MBA estimated. 

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