It’s a tough time for mortgage lenders. A rapid rise in mortgage rates and a big drop in origination volume has led to thousands of industry job losses over the last six months. And it’s likely to continue – executives are calling this one of the most challenging periods in memory. By some estimates, origination volume will fall in 2022 to about $2 trillion, about half the volume from the record-breaking years of 2021 and 2020.
Few originators have been left unscathed by the industry-wide reduction in capacity.
Wells Fargo, one of the nation’s largest banks, had at least 114 layoffs in its home lending business following a drop in revenue in that division in the first quarter of 2022. Sources told HousingWire the number was substantially higher, though the lender declined to provide figures.
Nonbank lenders such as Pennymac, Mr. Cooper, loanDepot, Guaranteed Rate, Fairway Independent Mortgage, Interfirst Mortgage Co., Movement Mortgage and Better.com all conducted at least one round of workforce reductions this year as mortgage rates surged past the 5% mark.
Below is a roundup of some of the notable lenders that have issued pink slips this year. We have undoubtedly missed some job cuts; you can share news of layoffs anonymously by emailing Connie Kim at [email protected] This list will be updated throughout the year.
Wells Fargo: at least 114 employees in home lending
Wells Fargo, the third-biggest lender by volume in 2021, laid off at least 114 employees in its home lending division this year. As of May 27, Iowa Workforce Development lists 49 layoffs at the Wells Fargo campuses in Des Moines and 34 employee reductions in West Des Moine. Impacted employees, all in the home lending division, will receive pink slips in June and July, according to Iowa’s WARN notification list.
According to Worker Adjustment and Retraining Notification (WARN) notices submitted to the California Employment Development Department (EDD) earlier this month, the company plans to cut 31 jobs in the home lending business, in letters to the EDD reviewed by HousingWire. Layoffs included 17 associate loan servicing representatives and eight loan servicing representatives as well as senior operations processors and senior loan servicing representatives.
“The home lending displacements are the result of cyclical changes in the broader home lending environment,” Lylah Holmes, a spokesperson at Wells Fargo, told HousingWire. Wells Fargo will be providing severance and career counseling, and helping affected employees identify other positions within the bank.
The bank’s revenues in the home lending business totaled $1.5 billion in the first quarter this year, a 19% drop compared to the previous quarter and 33% lower than the same period in 2021.
Wells Fargo executives in early June said the bank was considering pulling back on its mortgage business, where, beyond the challenges related to a decline in originations, it has also struggled with scandals related to minority lending.
loanDepot, the fourth-largest lender, per mortgage data firm Polygon Research, conducted an unspecified number of layoffs in late May. Multiple sources told HousingWire that “hundreds” were let go.
Jonathan Fine, loanDepot’s vice president of public relations, declined to say how many positions were cut and suggested that a review of the earnings call transcript from the first quarter would provide needed information.
In April, loanDepot announced plans for potential layoffs in the company’s first quarter earnings call after reporting a net loss of $91.3 million.
Company chief financial officer Patrick Flangagan said loanDepot doesn’t expect to be profitable this year and shared plans to reduce marketing personnel expenses.
Loan origination volume dropped 26% to $21.6 billion from the previous quarter, according to the firm, bringing the company’s market share down to 3.1%. The lender expects loan origination volume to post between $13 billion and $18 billion in the second quarter of this year.
Company executives said loanDepot is not expected to be profitable in 2022.
NewRez LLC: 386 employees
New Residential Investment Corp., the sixth-largest lender per Polygon Research, eliminated 386 positions, accounting for about 3% of the mortgage division’s workforce, in February.
The layoff decision followed New Residential Investment Corp.’s acquisition of multichannel lender Caliber Home Loans last year.
“As we continue to create synergies between companies, we are creating a structure to streamline business channels and create long-term growth,” the NewRez spokesperson wrote in an email to HousingWire in February.
Caliber was a heavy-hitter across multiple origination channels, generating $80 billion in originations and $153 billion in servicing in 2020. Best known for its distributed retail footprint and its fair amount of business in correspondent and wholesale channels, NewRez/Caliber had 3.7% of market share in 2021, according to data from Inside Mortgage Finance.
Owning Group: 189 employees
California-based Owning Corp., a direct-to-consumer lender acquired by Guaranteed Rate in February 2021, cut 189 jobs across three rounds from February to April.
The layoffs included 51 mortgage specialists, the most heavily affected position, and 42 mortgage consultants.
Employees that were let go also included underwriters, closers, and top executives such as lending directors and vice presidents for credit and underwriting.
Owning is the second company acquired by Guaranteed Rate in 2021 to face layoffs in the challenging mortgage market this year.
Early in January, Texas-based Stearns Lending, acquired in January 2021 from the financial giant Blackstone Group for an undisclosed sum, laid off 348 workers following the decision by Guaranteed Rate to discontinue operations of its third-party wholesale channel.
Better.com: more than 4,000 workers
Digital lender Better.com has already conducted three rounds of layoffs since late last year, and it’s unclear where the bottom is. The firm’s CEO infamously laid off 900 employees in a Zoom meeting in December where he then criticized the departing employees to remaining workers, 3,000 workers in March, some of which work in India, and an undisclosed number of people in April.
The firm has been seeking to go public via a special purpose acquisition company (SPAC), known as Aurora Acquisition Corp. But without reliable access to purchase business, conditions look bleak for Better.
An S-4 filing from Aurora, dated April 24 2022, showed that Better.com posted a loss of more than $300 million last year. The “deterioration” in Better’s financial performance was attributed to multiple factors including increasing interest rates and the effects of “negative media coverage” following a series of layoffs that began in December 2021, according to the filing.
Pennymac Financial Services: 474 positions
California-based nonbank mortgage lender and servicer Pennymac submitted WARN notices to cut 474 jobs by July this year.
Following workforce reduction filings of 236 employees in March, the firm submitted WARN notices to lay off 238 positions by June and July, according to letters to the EDD reviewed by HousingWire on May 27. Pink slips will arrive for California employees at six offices in Thousand Oaks, Pasadena, Roseville, Westlake Village, Agoura Hills, and Moorpark.
The latest round of WARN notices will impact 59 loan officers in the Thousand Oaks, Pasadena, and Roseville offices.
The office at Thousand Oaks accounted for the largest layoff notifications — of 97 employees, including 25 loan officers. Most of the other positions to be eliminated were analysts and managers in back office operations.
Top management jobs, such as vice presidents for underwriting and partial credit guarantee (PCG) transaction management, will also be reduced, according to Stacy Diaz, executive vice president of human resources at PennyMac, in letters to the EDD.
Pennymac posted a profitable first quarter but its net income dropped more than 50% driven by lower profits from its production segment.
Interfirst Mortgage Co.: 491 workers
Rosemont, Illinois-based Interfirst Mortgage Co. eliminated more than 490 positions this year in two rounds of layoffs.
Pink slips were delivered to a total of 351 non-commissioned loan officers in January: 77 in North Carolina and 274 in Illinois.
Interfirst felt the consequences of mortgage rates hovering at around 5% in May and announced an additional round of 140 layoffs at the lender’s facility in Rosemont. Starting May 17, or within two weeks of that date, the company cut jobs in the mortgage loan production. Employees that were let go included 26 processors, 20 originators, and 15 mortgage accountant executives in junior and specialist positions.
Administrative positions including human resources, talent acquisition, and executive assistants were also part of the workforce reductions, according to a WARN filed by the company in early March.
Mr. Cooper: about 670 positions
Residential lender and servicer Mr. Cooper slashed 670 jobs this year so far in two rounds of layoffs.
Earlier this month, Mr. Cooper said the elimination 420 positions, 5% of its employee base, will hit the originations side of the business. A total of 120 employees, or about 16% of the staff in California will be affected by the announcement, Mr. Cooper said.
Mr. Cooper laid off about 250 positions in the first quarter, the company said in a response sent following its earnings call in late April. While Mr. Cooper reported a profitable quarter with a net income of $658 million in 2022, the firm didn’t expect that to continue.
“Given lower volumes, rationalizing capacity is an unavoidable theme for everyone in origination and we’ve been very disciplined in managing capacity,” Chris Marshall, vice chairman and president of Mr. Cooper said.
The company forecasts quarterly origination volume earnings to be between $65 million to $85 million for the rest of 2022, compared to $157 million in the first quarter.
Union Home Mortgage: unspecified number of LOs
Union Home Mortgage laid off loan officers in junior and senior positions in April. The firm, like many other companies in the industry, said it’s “temporarily adjusting staffing levels” and declined to provide details on the size of the reduction.
The 49th-largest mortgage lender, according to Inside Mortgage Finance, wasn’t immune to the shrinking mortgage market despite reporting an origination volume of $4.2 billion in the fourth quarter of 2021, up 65.5% from the prior quarter. The lender’s origination volume rose nearly 26% to $13 billion in 2021 from 2020.
Fairway: cuts in wholesale and retail channels
Employees in the wholesale and retail channels, including analysts and senior positions in underwriting, training and information technology, were let go in May.
While Fairway didn’t provide any comment, a dozen employees affected by the layoff told HousingWire the company laid off professionals who were with the company for more than two years as well as those who started less than four months ago.
The firm was in a better position than its rivals six months ago but Fairway felt the pinch of mortgage rates in the 5% range and surging housing prices.
Fairway’s loans accounted for about 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.
The lender offered a two-week severance payment for some employees but no career transition support, former employees said.
Stearns Lending: 348 employees
Stearns Lending laid off nearly 348 employees in March following Guaranteed Rate’s decision to discontinue operations of its third-party wholesale channel.
In January 2021, Guaranteed Rate acquired Stearns Holding from Blackstone Group for an undisclosed sum. The acquisition will enable Guaranteed Rate “to bolster retail loan origination and further its joint venture platform while developing new multichannel capabilities, the company said at the time of the acquisition.
Guaranteed Rate’s CEO Victor Ciaradelli, in a letter to brokers about shutting down Stearns wholesale channel, said the company will focus on leveraging its “industry-leading purchase platform augmented by the best loan officers in the business.”
Redfin mortgage: 121 employees
Redfin issued pink slips to 121 employees in January following the real estate giant’s announcement of an acquisition of mortgage lender Bay Equity Home Loans for $135 million.
The impacted employees, less than 2% of the total staff, were mainly in sales support, capital markets, and operations.
“Reorganizing our mortgage operations unfortunately means some colleagues and friends will be leaving Redfin,” Adam Wiener, Redfin’s president of real estate operations, said in a statement in January. “Many of these people are the pioneers who helped build Redfin Mortgage from scratch and we owe them a debt of gratitude.”
The workforce reduction was expected to bring $6 million to $7 million in costs and transaction advisory fees of approximately $3.5 million, according to Redfin. The firm also forecasted to incur a non-cash impairment charge of $2 million to $3 million on mortgage-specific, internally developed software.
Interactive Mortgage: 51 employees
Mortgage lender WinnPointe Corporation, doing business as Interactive Mortgage, laid off 51 employees in 2022 following a workforce reduction of 128 people last year.
The permanent layoffs, according to the WARN notices sent to the California Employment Development Department, was in part due to the more than $1 million dollars in losses from rises in increase rates and the “economic collapse triggered by the Covid-19 pandemic.”
Of the 51 employees who were laid off in April, three are underwriters, 15 are LOs, 11 are processors, 19 are admins, and three are funders. The 128 employees who were let go last year, included six underwriters, 20 loan officers, 26 processors, 51 admins, and 25 funders.
USAA Bank: more than 90 employees
Texas-based USAA Bank reduced its mortgage sales team by more than 90 employees, the San Antonio Express News reported in April.
The publication said the layoffs came amid USAA Bank’s projections of a 34% drop to about 25,000 real estate loans despite having adequate staff in place to facilitate 38,000 loans, citing internal emails.
The company confirmed the cuts but categorized the workforce reduction as business as usual for a company of its size.
USAA Bank was founded in 1922 by a group of 25 U.S. Army officers to insure each other’s vehicles because of the perception that military officers were a high-risk group. Headquartered in San Antonio, Texas, the bank has five financial centers across the country including New York and Colorado.
Tomo Mortgage: almost a third of its workforce
Tomo issued pink slips to 44 employees, almost a third of its employees in late May.
Greg Schwartz, CEO at Tomo, said in a LinkedIn post said the firm was “impacted by the rapid rise in interest rates that has reduced purchase mortgage margins.”
With venture capital pulling back, Schwartz said the firm “must map out a stable budget that will rely on less capital for longer.”
Tomo will dial back market expansion plans and focus on building tech that will deliver a faster and less costly home buying process, Schwartz added.
The firm, which now has 110 employees, raised $40 million in a Series A funding round in March and touted a valuation of $640 million.
Founded in 2020 by former Zillow executives Carey Armstrong and Shwartz, Tomo claims to close 98% of its loans on time.
No layoffs here*
Lenders that haven’t laid off employees yet this year include United Wholesale Mortgage (UWM) and Rocket Mortgage.
UWM, the nation’s second-largest lender by volume, hasn’t instituted layoffs like many of its competitors, though executives are mindful of expenses.
Total expenses dropped to $316.9 million in the first quarter of 2022 from $364.4 million during the same period in 2021. In Q1 2022, salaries, commissions and benefits reached $160.6 million, which CEO Mat Ishbia considered a “solid” number.
“It’s very important that we continue to manage our expenses. We have complete control of this, and we feel great about where we’re at,” Ishbia said to analysts during UWM’s earnings call.
Rocket Companies, the parent of Rocket Mortgage and Amrock Title, has not eliminated any positions but has offered a voluntary buyout to 8% of its staff in April.
In its most recent earnings call in May, executives said Rocket took “significant cost reduction measures” that includes implementing a voluntary career transition program to certain team members, reducing production costs, and shifting its market spending for the second quarter.
The firm in April said the buyout would save $40 million per quarter, after a one-time charge between $50 million and $60 million.