The largest lender in the mortgage industry, Rocket, is looking to trim its workforce following two years of record loan volume.
Detroit-based Rocket Mortgage and Amrock, its title company, are offering voluntary buyouts to 8% of its workforce, officials reported on Monday. Rocket companies, including Rocket Mortgage, employ approximately 26,000 people, mostly in Detroit. The buyout program was first reported by Crain’s Detroit Business.
The affected employees were primarily in Rocket Mortgage’s Operations Team and at various groups within Amrock. A Rocket spokesperson framed it as an “opportunity to voluntarily accept a career transition incentive.” These incentives include:
- A several months-long compensation package;
- Full medical, dental, and vision coverage for six months;
- Payment for banked personal time off;
- Early vesting of stock incentives that team members received at the company’s IPO; and,
- Outplacement services.
“This optional plan will provide team members several months of salary, a portion of their banked time off, benefits coverage through November, vesting of stock the team members were awarded at Rocket Companies’ IPO and career transition services – which includes one-on-one career coaching, resume building and job search assistance,” Mike Malloy, chief administrative officer at Rocket Central, said. Malloy oversees the human resources services for all of Rocket Companies.
Seemingly Rocket is not immune to the latest market downturn as most mortgage lenders were affected by the incremental hikes in mortgage rates, including the most recent increase of the 30-year mortgage rate to 5.11%, up from less than 3% a year ago. Not only that, but low for-sale housing inventory is affecting the rate of applications, causing most analysts to forecast a precipitous drop in mortgage originations. Mortgage Bankers Association predicts overall originations to total $2.58 trillion in 2022, a 35.5% decline from last year.
“As a result of today’s market, some team members have told us they are considering a move to another position or a completely different industry,” Malloy continued. “At the same time, our career growth options in certain areas of Rocket Mortgage and Amrock are limited right now, while the housing market normalizes after two years of unprecedented volume. With this in mind, we are focused on giving our team members pathways to career success – which is why Rocket Mortgage and Amrock today offered a voluntary career transition opportunity to a select group of its team members.”
Every lender seems to handle layoffs in their own way, conveying the culture and attitude within these companies. Some companies, like New York-based Better Holdco. Inc. resorted to involuntary layoffs as the business contracts. About 80% of Better.com’s loan transactions were refinances, according to data from Market Mobility Intelligence, making it much harder to compete in a purchase market. The company’s CEO Vishal Garg muffed a number of layoffs, including last month when it laid off a third of its staff and in December when the company fired 900 employees via a mass Zoom call.
Despite achieving record loan volume last year, Rocket Companies Inc. saw its 2021 net income drop 35% from 2020 to $12.9 billion. During Rocket’s fourth quarter conference call in late February, CEO Jay Farner said “... we're not going to have a conference call where all of a sudden we let a group of them know they're not going to be working here any longer. That's just not how we do this. That profitability is important, but the investment in our team members is the most important thing that leads to the future growth of this organization.”
“One of our responsibilities as a company is to provide our team members a fulfilling career, and we have been able to do that for tens of thousands in the last 36 years,” Malloy, the chief administrative officer, added in his statement to National Mortgage Professional magazine. “Over that time, we have been through several market cycles – similar to those the industry is experiencing today.”
