California-based mortgage lender LoanDepot has announced that it intends to lay off thousands of workers as the company deals with “rapidly changing market conditions.”
Under the firm’s Vision 2025 plan, LoanDepot aims to reduce staffing levels from the 11,300 total at the end of 2021 to 6,500 by the end of 2022. At present, the company employs 8,500 people, which means another 2,000 employees are likely to lose their jobs.
According to Chief Financial Officer Patrick Flanagan, the company currently has a cash position of about $1 billion. The firm is expecting “continued challenging market conditions,” estimating mortgage originations to decline by about 50 percent in 2022.
An accelerated decline is expected in the second half of the year, followed by a “further decline” in 2023.
LoanDepot was focused on cutting down costs “significantly” during the second quarter of 2022. Severance packages and benefits-related payments in the second quarter were calculated to be worth about $3.5 million to $4.5 million.
“Over the next two quarters, we expect to accelerate these efforts and aggressively drive down our costs in line with our previously stated goal of exiting this year with a profitable operating run rate,” Flanagan said in the filing.
Industry-Wide LayoffsRising prices of homes and increasing mortgage rates have created a housing affordability crisis in America.
As affordability becomes a challenge, the demand for homes and mortgages falls, thereby affecting the mortgage industry. Wells Fargo & Co. has already terminated at least 114 employees in 2022 from its mortgage lending team. JPMorgan Chase & Co. announced layoffs in June, which affected over 1,000 employees.
Some people have been shifted to new teams.
Olu Sonola, head of U.S. Regional Economics at Fitch Ratings, said the western, midwestern, and southern regions of the United States are likely to see more job losses in the housing market.