Home News These mortgage lenders are making major job cuts as production plummets

These mortgage lenders are making major job cuts as production plummets

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Mortgage lenders have imposed new job cuts in the fourth quarter, reflecting a terrifying situation for originators.

This week, the latest freddie mac weekly survey data 30 year fixed rate mortgage It rose to 7.08%, up 13 basis points from last week. His average rate this time last year was 2.98%.

“Mortgage rates are back above 7% as the housing market adapts to rapidly tightening monetary policy,” Sam Cater, chief economist at Freddie Mac, said in a statement. “The housing market is the most interest-rate sensitive sector of the economy, and the impact of interest rates on home buyers continues to evolve. there is no.”

The surge in mortgage rates is a result of continued tightening of monetary policy to counter persistent inflation. In its latest move, federal reserve On November 2nd, we raised the Federal Funds Rate by another 75 basis points. deceleration of inflation.

“Over the past year, primary mortgage rates have risen more than 300 bps to 7.2%, the largest 12-month rise since the 1980s.” Keef, Brouillette & Woods (KBW) issued a report following the Fed’s decision last week. “This creates a challenging environment for volume-sensitive businesses such as mortgage originators and title insurers.”

In other words, mortgage lenders are adjusting their workforces for these dark times.

freedom mortgage, prosperity mortgage When mortgage sector of Citizens Bank Pink vouchers were issued during the first two weeks of October and November.In addition, companies such as NewRez, Better.com When wells fargo Filed Worker Adjustment and Retraining Notices (WARNs) with authorities in various states in the United States.

in the meantime, cross country I was faced with a case of “fake” warning notices by a former employee that said the company laid off 100 employees in Colorado. The company denied the layoff round in a written statement sent to HousingWire. The state’s Department of Labor and Employment has removed the notice from its e-WARN system, saying it is “exploring ways to make the process more robust.”

Significant reduction in personnel

Freedom Mortgage has had a major layoff since last week, sources told HousingWire. At least 50% of staff, operations positions and loan officers were affected, according to multiple former employees. Lenders and servicers have also accelerated offshoring to India and the Philippines amid worsening market conditions, the sources said.

According to multiple sources, the layoffs impacted both the retail and wholesale channels and their positions following a period of overseas staff training. HousingWire previously reported on Freedom Mortgage’s multiple layoffs this year. offshore jobs Process mortgage files at low cost.

Freedom was founded in 1990 by Stanley Middleman. claims against LinkedIn Have more than 10,000 employees. A total of 5,001 Freedom listed his mortgage as an employer, including part-time roles. Of all his employees, 428 of them are active loan officers, according to mortgage software company Modex.

“At every site, we have had job cuts from vice presidents to sales managers to loan originators,” said a middle-management employee. “All field staff had their salaries cut, were laid off, or had other roles.”

Freedom, one of the nation’s largest VA and government lenders and servicers, did not respond to requests for comment on matters such as the size of the layoffs, positions removed and whether severance pay will be provided.

Employees began to see their positions, including underwriters and closers, moved offshore after a pilot “pilot program” that left US employees with few loans to consider.

“They (the overseas employees) come to us to review before proceeding to processing and underwriting,” said a former employee, who requested anonymity. “They (the company) were doing pilots with people offshore. They brought people offshore and said they were making changes.”

“Red flags have been raised since February,” said another former employee. “At that time, outsourcing impacted our day-to-day operations. U.S. employees used to have to make early financial disclosures when taking out loans. started to become

Freedom Mortgage’s loan origination volume declined at the second fastest pace among top mortgage lenders this year compared to 2021. Ranked as the 18th largest mortgage originator, he has $24.4 billion in origination volume as of September 2022, down 75% from as of September 2022.For the same period last year, according to data from Inside Mortgage FinanceBut its services business is the nation’s ninth largest, with a total of $464 billion, up 19% from the same period last year.

In association with, loan depotwhich Reported economic loss of $138 million announced in the third quarter that it had cut its workforce by 47.5% to 6,121 over the past 12 months.

not really good

New York-based Better.com has had several layoffs since late 2021, cutting 28 ununion-represented staff in New York last week for “economic” reasons, the company said. told the New York State Department of Labor. On Friday.

Better.com has closed its New York City offices and “started 28 employee turnovers on November 4, 2022,” the WARN notice says.

“Better is focused on making prudent decisions that consider current market dynamics,” a company spokesperson said in a statement. “The company remains committed to serving customers for the long term and making homeownership faster, easier and more affordable for all Americans.”

The scale of layoffs across the country is unknown, but here are the locations of affected employees: LinkedIn Posts include Client Success Specialist, Senior Operations Associate, Account Manager, and Problem Resolution Specialist.

Since laying off 900 employees via Zoom in December 2021, the company has laid off 5 of its thousands of employees in total within a year. Digital lenders cut nearly 3,000 jobs in March 35% of staff Two more layoffs will follow, in the US and India. April When August.

Better.com cut the length of time employees can take time off with an August layoff.Details were not disclosed at the time, but a recent lawsuit Submitted by former director Ryan Pugh, provides some details. Pugh, who was fired in August, claimed a change in his leave policy reduced his 12 weeks of parental leave to four weeks.

deposit cut

Deposit-backed loan leader Wells Fargo is also on the list of companies to lay off in the fourth quarter. In this case, the job cuts come after the bank cut its originations in 2018 by 59% year-over-year. Q3 2022.

Wells Fargo informed the Maryland Department of Labor that it had cut 31 jobs on Friday. In addition, the bank informed Iowa officials that he plans to lay off 14 employees.

In Iowa, the job cuts are due to the Des Moines and West Des Moines offices. warning notice Submitted to Iowa Workforce Development. The termination date is scheduled for his December 22nd and his January 3rd. The Des Moines metropolitan area is the headquarters of the bank’s mortgage division.

Positions on WARN notices in Maryland and Iowa included mortgage roles and other businesses, according to a source with knowledge of the layoff decision.

A company spokesperson wrote to HousingWire: “Our recent changes are a result of the broader interest rate environment and are consistent with the reaction of other lenders in the industry.”

Wells Fargo recently announced a change in leadership for its mortgage division. Christy Fercho, head of mortgages at Wells Fargo, has been named the new head of the bank’s Diversified Segments, Representation and Inclusion (DSRI).

ferrucho is successful Clever Santoswill become CEO of Wells Fargo’s consumer finance business in July 2022. She will remain head of mortgages while the company searches for her successor.

marginal reduction

New Rez, a mortgage subsidiary rhythm capital, It notified the Maryland Department of Labor on Friday that it cut 24 jobs last week. They said the layoffs were unrelated to the Covid-19 pandemic but did not provide further details.HousingWire sent a request for comment, but a company spokesperson responded. I have not.

New Rez’s latest layoffs seem small compared to Rithm Capital’s overall layoffs. rhythms CEO Michael Nierenberg said on a conference call with analysts last week that the group has cut 7,500 jobs at brands such as New Rez and Caliber after August 2021.

“At the time Caliber closed in 2021, the system had 13,500 employees. Now, unfortunately, the current market conditions have reduced that number to around 6,000,” says Nierenberg. says Mr.

Small and medium-sized enterprises

prosperity mortgage, a Long and Fosters The company also had a series of layoffs in early October that affected a group of processors and underwriters, two former employees told HousingWire. Long & Foster Companies is a subsidiary. Home Service of America, Berkshire Hathaway affiliate.

A company spokesperson said Prosperity continually assesses market conditions and related business needs and adjusts its operations to the changing economy.

“Today’s higher rate environment has forced our company, like many others in our industry, to make the difficult decision to reduce headcount,” a spokesperson told HousingWire.

Prosperity has generated $11.2 billion in the last 12 months, according to technology mortgage platform Modex. The company is licensed in her 49 states, 387 branches and 491 active loan officers.

The Franklin American Mortgage Company, founded in 1994 in Brentwood, Tennessee, Citizens Bank There have also been layoffs since 2018, according to former employees.

A company spokeswoman said fewer than 25 employees were affected by the layoffs, but did not provide further details.

Dark days continue

Against the backdrop of rising interest rates and a shrinking mortgage origination market, the loan officer workforce is already reduced to near pre-pandemic levels.

In 2021, the total number of loan officers nationwide will be 353,119, up from 263,494 LOs in 2019, according to a mortgage data analytics firm. geniusAs of July 15th this year, there are 276,837 licensed loan officers in the country, according to InGenius data.

Don’t expect the job market for mortgage professionals to improve anytime soon.

Garth Graham, managing director of the Stratmor Group, told HousingWire that industry-wide employment in non-banks is “definitely back to pre-COVID levels, with a total of 300,000 jobs.”

“It’s painful for 150,000 people [or so people that are going to lose their jobs]’ he said.

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