The giant sucking sound in the home loan industry grew louder Wednesday when Sprout Mortgage told employees it’s going out of business.
The company broke the news to its more than 300 staffers during a conference call Wednesday, according to HousingWire. A former employee of the Long Island-based mortgage lender told the publication that Sprout had already slashed its workforce several times.
Sprout’s closure comes a week after Texas-based First Guarantee Mortgage essentially shuttered operations when it laid off most of its staff, according to ex-employees. Many other companies have shed workers as demand for mortgages hits record lows.
Rising interest rates, high home prices and a shortage of listings have sidelined some buyers and slowed sales, which means fewer purchase loans, and the rate hikes have ended a spate of refinancing. As a result, lenders no longer needed — and in many cases could not afford — the large number of people they had hired to handle applications.
Other companies that have been forced to reduce their mortgage workforce include:
- JPMorgan Chase: The biggest bank in the country two weeks ago laid off hundreds of employees from its home-lending division.
- Wells Fargo, the biggest banking mortgage lender in the country, laid off or reassigned employees around the same time.
- Mr. Cooper, a Dallas-based lender, in June laid off 5 percent of its staff, or 450 employees, after cutting 250 employees earlier in the year. The company’s direct lending business was down 32 percent year-over-year.
- Digital mortgage lender Tomo laid off 44 employees a month ago, or just under one-third of its staff, despite raising $40 million in March in a Series A round. In announcing the fundraise, with its valuation reaching $640 million, the company said it planned to double its headcount and expand into new markets by the end of the year.
- The San Francisco-based mortgage lending startup and proptech unicorn Homelight laid off 19 percent of its staff last month.
- Austin-based Keller Williams laid off employees in May from its mortgage lending arm, Keller Mortgage, after dropping 150 recent recruits in October.
- Movement Mortgage in April laid off 170 of its roughly 4,500 employees. The news came shortly after two other mortgage lenders, Interactive Mortgage and Freedom Mortgage, announced layoffs.
- Mortgage lender Better.com in March announced it was laying off 3,000 workers in the U.S. and India, or 34 percent of its workforce, just months after its CEO was forced to apologize for laying off 900 employees over Zoom.
- Blend Labs, another digital lending platform, in April laid off 200 employees, or 10 percent of its staff, in a move that shed more than $34 million from its payroll.