Home » Employment News » Home mortgage firm Mr. Cooper laid off almost 700 employees as loan demand sank

Home mortgage firm Mr. Cooper laid off almost 700 employees as loan demand sank

By Nagasunder in Employment News, posted July 29, 2022

Mr.Cooper Group has let go around 700 staff after a drop in profits and sales.

The demand for mortgages fell sharply in the second quarter, which has led to the company having to cut staff.

The Coppell-based business acknowledged to the Dallas Morning News that Mr. Cooper fired 420 workers in the second quarter and 250 in the first quarter, most of whom worked in originations.

The layoff trade journal Asset Securitization Report originally reported the layoffs in the second quarter were in June Officials from Mr. Cooper did not discuss the layoffs during their quarterly earnings call on Wednesday, save to reference $3 million in severance costs.

“The mortgage industry is facing an environment of rapidly increasing interest rates and rising inflation, which has resulted in decreased originations volumes across the entire industry,” the company said in an emailed statement.

“It is with deep regret that we needed to eliminate positions in the second quarter as part of our efforts to manage costs and ensure we position the company for long-term success.”

120 of those layoffs were made at Mr. Cooper's office in Santa Ana, California, according to a Worker Adjustment and Retraining Notice submitted to the state of California. Mr. Cooper had about 8,000 U.S. employees as of the second quarter.

As per the company's report released on Wednesday, Mr. Cooper's earnings decreased by 77% from $658 million in the first quarter to $151 million in the second. Its revenues sank 43%, from $1.05 billion in the first quarter to $599 million in the second.

The business-funded 29,154 loans in the second quarter, compared to 46,933 loans in the first quarter.

It earned $63 million in pre-tax income from originations during the second quarter, down from $157 million in the first.

CEO Jay Bray said the company’s portfolio growth started to take off during the last financial crisis as it took on large, distressed portfolios from top banks.

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Bray said: “In a severe recession, I’d expect to see a shakeout among servicers who don’t have our capabilities, and I believe that would lead to new growth opportunities for us, just like you saw after the last crisis,”

Bray said that the increase in interest rates was the reason for the servicing division of the company's $30 million pre-tax gain, up from $7 million in the first quarter.

As of the second quarter, Mr. Cooper serviced $804 billion in loans, an increase of 1% from the first quarter and 23% from a year earlier. At some point, it hopes to repay $1 trillion in debt.

Bray said: “This steep ramp in servicing income is a huge benefit in this transitional environment given the obvious pressure on originations,”

First Guaranty Mortgage Corp, a different mortgage firm with offices in North Texas, filed for bankruptcy in June and fired more than 400 workers as justification.

Source: The Dallas Morning News

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