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The “headcount reductions” have begun at loanDepot, as an unknown number of employees have been let go, while a second round has taken place at Mr. Cooper Group, where 420 employees were laid off this week.
Mr. Cooper officials said in a statement that the mortgage industry is facing an environment of rapidly increasing interest rates and rising inflation, which has resulted in decreased originations volumes.
"It is with deep regret that we needed to eliminate positions as part of our efforts to manage costs and ensure we position the company for long-term success," officials said. "Our team members play the most important role as we focus on keeping the dream of homeownership alive, and any decision made that impacts our team and culture is taken very seriously. We are committed to being transparent and respectful during this time and are offering resources to support these team members as they transition to the next phase of their careers."
Officials said roughly 420 positions, or about 5 percent of Mr. Cooper's staff, are affected by the changes, with the majority working in originations. The changes affected 120 employees, or about 16% of the staff, in a Santa Ana office
loanDepot officials, meanwhile, declined to say how many positions have been cut by the California-based lender this week, or when the cuts happened.
Jonathan Fine, loanDepot’s vice president of public relations, said Thursday that the company would not provide specifics and suggested that a review of the transcript from the first-quarter earnings report would provide the needed information.
The transcript yielded this quote from Patrick Flanagan, loanDepot’s chief financial officer on May 10th:
“We are aggressively managing our cost structure to return to profitability by the end of the year. We expect to achieve this goal by further reducing marketing expenses and personnel expenses through the addition of headcount reductions,” Flanagan said in the earnings report. “Despite these further expense reductions, given our expectations for decreasing market volumes and the competitive pressures on margins, we do not expect to be profitable for the fiscal year ending 2022.”
The earnings transcript did not provide specific numbers for job cuts. The company employed approximately 11,700 people.
Loan originations in the first quarter plunged by 48% from a year ago and 26% in the previous quarter, according to the earnings report. The result was a $91 million loss for the company in the quarter.
It might not be the only time job reductions happen this year, according to earnings report remarks made by loanDepot CEO Anthony Hsieh, who said, “this is fairly early in the cycle. So as the 10-year yield continues to rise and stabilize, I fully expect this pressure is going to force some additional consolidation.”
This week’s move was signaled in a National Mortgage Professional magazine post last August.
In that article Hsieh, who founded loanDepot, admitted that his company was in for some significant cost-cutting during a second quarter earnings call.
Editors note: this article was updated to include layoffs from Mr. Cooper Group.