Mortgage lender First Guaranty Mortgage Corporation cut about 80% of its workforce on Friday and has stopped accepting new mortgage applications, HousingWire has learned. Former employees said the lender has “essentially shuttered.”
According to two former FGMC employees, the company on Friday laid off around 500 employees without severance payment, meaning only 100 staffers remain.
“They are not accepting new loan applications, so that probably means they are getting ready to close up the whole thing,” an employee who was affected by the layoff told HousingWire.
The investment management firm PIMCO bought a sizable stake in the mortgage lender in 2015 and initiated layoffs and management changes in 2018, another tough year for the mortgage industry.
The same former employee said PIMCO was trying to strike a deal to bring more funding to FGMC, which “went south” and then FGMC “got hit with margin calls.”
“PIMCO was attempting to sell part of FGMC but when that fell through, they completely divested,” said another source. “About nearly 500 people were affected today including sales and ops in all three channels. Essentially the company is shuttered.”
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.
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“Apparently their stockpile of ‘cash’ was a lie. Time to start the job search!,” one former employee posted on LinkedIn.
In a written statement, a spokesperson for the lender said FGMC “made the difficult but necessary decision to institute a reduction in force as the mortgage market faces significant, unexpected, and unprecedented economic pressures.”
FGMC declined to comment further, and PIMCO did not immediately return requests for comment.
Licensed in 49 states and the District of Columbia, FGMC offers mortgage loans for new home purchases and refinancings. The company offers a variety of loan products, including FHA, USDA, VA and non-QM loans. Just last week FGMC launched a new second-lien program, where borrowers could tap their equity without disrupting their rate.
The mortgage lender does business as Goodmortgage in retail branches, where they work directly with consumers. It also works closely with third-party origination partners through the correspondent and wholesale channels, where the company offered its proprietary line of Non-QM products called Maverick Solutions.
This story was updated on June 24, 2022 to include a written statement by FGMC.