Mr. Cooper aligned himself with a dismal trend triggered by rising mortgage rates.
The Dallas-based lending giant has laid off 420 employees, Inman reported. The layoffs, which mainly affected the company’s loan origination department, follow a series of layoffs earlier this year that affected 250 employees.
The release of the Asset Securitization Report sector was first to report on the latest round of layoffs, which affected around 5% of the company’s workforce.
In a statement to Inman, Cooper pointed to “rapidly rising interest rates and rising inflation, which has resulted in lower origination volumes.” In a regulatory filing last month, the company lowered the projection for second-quarter mortgage generation from $65 million to $85 million to $40 million to $50 million.
Mr. Cooper’s direct lending business was down sharply, down 32% year-over-year.
The company also focuses on servicing loans. This part of the business is booming as fewer buyers want to refinance loans in a rising rate environment. These headwinds led the company to predict that it would not break even until the second quarter.
If there’s one consolation that recently unemployed workers can find, it’s that they’re not alone. Layoffs have swept through the technology and mortgage sectors as companies struggle to cope with changing mortgage rates.
A total of 44 employees have been laid off from digital mortgage lender Tomo, almost a third of its workforce. The layoffs came less than three months after an equity injection.
In April, digital lender Blend Labs laid off 200 employees, or around 10% of its staff. Keller Williams’ lending arm, Keller Mortgage, recently implemented its second round of layoffs in just a few months. And Better.com has laid off thousands of people since interest rates began to rise in the fall, some more controversially than others.
Mr Cooper was formerly known as Nationstar Mortgage before a name change in 2017. In 2020 the company was ordered to pay $73 million to around 40,000 homeowners in a settlement with Consumer Financial Desktop protection. The company has been accused of failing to provide basic services for the mortgages it serviced from 2012 to 2016.[Inman] —Holden Walter-Warner