Pink slips will arrive for 3,000 employees of Better.com, the mortgage lender that received a mountain of bad press three months ago when its CEO, Vishal Garg, fired 900 workers via Zoom and chastised their work ethic to remaining employees.
The new round of layoffs reaches 35% of Better.com’s staff and hits workers in the United States and in India, according to a person familiar with the lender’s decision. TechCrunch first reported rumors of the layoffs on Monday.
Like many mortgage lenders, Better.com made a killing in 2020 thanks to low rates and a homeowner rush to refinance, but latter half of 2021 and 2022 have not been as kind. Interest rates have climbed well above 3%, turning the mortgage market to purchases, which Better isn’t well positioned to capitalize on. The reputational damage from the December layoffs also hinders the company’s ability to develop relationships that lead to purchase business.
“As you know, the residential real estate market has been changing rapidly, and our entire industry is facing a dramatic drop in origination volume due to rising interest rates,” Kevin Ryan, CFO and interim president, said in an email to Better.com employees reviewed by HousingWire.
“Unfortunately, that means we must take the difficult step of streamlining our operations further and reducing our workforce in both the U.S. and India in a substantial way.”
Ryan, a former executive at Morgan Stanley, stepped in to manage day-to-day decisions of the company in December, when Garg took a leave after laying off staffers in a webinar. Specifically, Garg accused former employees of “stealing” from the company by working a mere two hours per day, which laid off employees denied.
The originations landscape is shifting – is your business ready?
HousingWire recently spoke with Jon Gerretsen, SitusAMC Managing Director of Residential New Originations and Fulfillment Services, about the home buying boom and how lenders can gain market share and drive profitability in a white-hot purchase mortgage market.
Presented by: SitusAMC
The CEO made a somewhat surprising comeback in January. Garg took the time to “reflect on his leadership duties [and] reconnect with the values that make Better great,” the board said in an internal memo.
This time, according to the letter, Better.com is doing “everything possible” to personally reach all employees affected by the layoffs. They will receive a call over the coming days from a member of the leadership team. However, Techcrunch reported that some affected workers found out about their job status by seeing a severance check in the company’s payroll app.
HousingWire reached out to the company seeking a comment, but received no answer.
Better.com said affected employees will be eligible for a minimum of 60 working days – and as much as 80 working days – to receive cash severance payments. Also, health insurance coverage in the U.S. will be extended through March.
Better.com partnered with a career transition company, Randstad RiseSmart, to support affected employees with career services. RiseSmart can identify and connect departing employees directly to employers who are actively hiring.
The mortgage lender said it will not enforce existing non-compete provisions based on individual circumstances, but non-disclosure provisions will remain in effect.
Better’s financial backer, SoftBank, made a $750 million cash infusion last year, out of a total $1.5 billion in committed funding. The remaining $750 million is to be doled out after the company goes public via a special purpose acquisition company. But when – or if – that will happen has been thrown into question.
