Pink slips will start arriving for Santander Bank’s employees working in the mortgage and home equity businesses following the bank’s announcement to stop originating such loans in the United States.
In Pennsylvania, the company announced 53 permanent layoffs with effective date on April 8, according to a Worker Adjustment Retraining Notification (WARN) sent to the state’s Department of Labor and Industry.
This appears to be just the beginning.
HousingWire has learned that the bank’s exit from the residential mortgage business in the U.S. will result in layoffs of more employees, which a source with knowledge of the decision said would not exceed 5% of the bank’s workforce in the U.S.
According to its website, Santander U.S. has 17,200 employees serving 5.2 million customers in the U.S. Santander Bank, NA., the retail and commercial businesses, has around 9,000 employees.
Santander Bank, which has long been a bit player in the residential mortgage space, announced on Wednesday it will stop originating residential mortgage and home equity in the U.S. The bank will consider applications through its EZApply portal until Feb. 11. The decision will not impact the commercial mortgage business.
According to the bank, it is adopting a strategy of unlocking capital to fuel growth and deliver more sustainable returns. “We continue to focus on investing in products that have scale and that leverage our core strengths,” the bank said in a statement to HousingWire.
Inside Mortgage Finance reported that Santander residential production totaled $2.7 billion in 2020, but there are no figures for 2021. In the United States, Santander Bank registered 2.3 billion euros in underlying attributable profit to the parent company in Spain in 2021, up 230% compared to the previous year.
Santander’s mortgage division is the first victim as the landscape shifts away from historic mortgage origination volumes and record rate-term refinance business.
Originations are expected to decline 33% year-over-year to $2.59 trillion in 2022, according to the Mortgage Bankers Association (MBA). The reasons are higher rates, lower volumes, and fiercer competition.
Mortgage lenders are proactively shoring up vulnerabilities and playing to strengths. LoanDepot is servicing more loans in-house, Rocket is expanding its business via acquisitions, Homepoint has reorganized its structure to contain costs, and Guaranteed Rate is focusing on profitable channels, leaving the wholesale channel.