Company cites 'ever-changing market conditions' as the reason for the reduction
Texas-based USAA Bank is the latest in a growing list of companies that has laid off employees amid a slowed home buying market, the company confirmed to Mortgage Professional America.
The San Antonio Express News reported the company had reduced its mortgage sales team by more than 90 employees amid projections of a 34% drop to some 25,000 real estate loans despite having adequate staff in place to facilitate an anticipated 38,000 loans. The newspaper obtained internal emails as the basis of its report.
Reached by MPA, the company confirmed the cuts but categorized them as business as usual for a company of its size, which employs some 16,800 workers: “USAA continually adjusts staffing based on ever-changing market conditions and to meet the demands of our membership,” USAA Bank spokesman Roger Wildermuth told MPA in a prepared statement. “We have a dedicated team ready to support impacted employees with a range of benefits, which may include finding other roles in areas of our business where we’re hiring, and other transitional benefits.
It’s unclear if the San Antonio-based company has notified the Texas Workforce Commission of the cuts as required by the Worker Adjustment and Retraining (WARN) Notification Act. The labor law is designed to protect employees by providing for a 60-day notice of mass furloughs.
According to Investopedia, the company was founded in 1922 as a way for a group of US Army officers to insure each other’s vehicles. Since those early days, the company has grown to become one of the nation’s top fully integrated financial services organizations.
The news comes three months after another Texas-based firm, Stearns Lending LLC, revealed plans to lay off 348 employees in a move prompted by the closure of its wholesale channel after its acquisition, according to a notice to state regulators. Headquartered in the Dallas suburb of Lewisville, the company last January was purchased by Guaranteed Rate, one of the nation’s largest retail mortgage lenders. In a January 05, 2021, Press release, the acquiring firm described Stearns as a “…national top 25 lender with more than $20 billion in origination volume in 2020.” Stearns was founded in 1989, with operations in all 50 states through retail, joint venture, partnership, and wholesale channels, according to the Press release.
But one year later, Guaranteed Rate opted, after a “strategic review”, to discontinue third-party wholesale channel Stearns Wholesale Lending, according to various reports. In a letter circulated by various media outlets, Guaranteed Rate CEO and president Victor Ciardelli alerted brokers of the decision to close Stearns – which was originally purchased with an eye toward making Guaranteed Rate the number one lender, according to the letter.
Read more: Wholesales lender lays off 348 workers
The following month, California-based Winnpointe Corp., doing business as Interactive Mortgage, confirmed plans to lay off more than 50 employees by this month, according to a regulatory filing. The company notified the Employment Development Department of the imminent layoff of 51 workers in compliance with the WARN Act.
The layoffs wave began in earnest last year, when Better.com cut hundreds of jobs in December via a Zoom meeting. The cuts represented some 15% of the company’s total workforce. In the video that was viewed by MPA, company CEO Vishal Garg told staffers: “If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated effective immediately.”
Garg blamed market changes and a fall in productivity for his decision.
Read next: CEO announces hundreds of layoffs in bizarre Zoom call
In a February report, Bloomberg predicted more cuts to come as the industry braces for more layoffs amid rising interest rates. The number of people working as brokers for mortgages and other kinds of loans - a proxy for total home lending employment - has surged more than 50% to around 130,000 since late 2019, according to the US Bureau of Labor Statistics as referenced by Bloomberg. The level is believed to be the highest since 2006, according to the report.
Yet mortgage rates have been rising since August, and more expensive borrowing has meant that applications to refinance mortgages have fallen about 45% in the last few months, according to the Mortgage Bankers Association. While some employees are able to transfer to others parts of the mortgage business - making loans for home purchases, as an example - industry layoffs are inevitable. “With rates moving higher, capacity is going to be adjusted across the entire industry,” Jeff DerGurashian, chief capital markets officer at LoanDepot Inc., told Bloomberg.
