Top-10 residential lender and servicer Mr. Cooper has cut another 420 jobs, the second major layoff it has made this year.
In a disclosure made public Thursday afternoon, the company said the cuts amounted to 5% of its employee base. Most of the job losses will hit the originations side of the business. About 16% of the staff losses will affect California staffers, and will take effect in July.
“It is with deep regret that we needed to eliminate positions as part of our efforts to manage costs and ensure we position the company for long-term success,” Mr. Cooper said in a statement Thursday.
Mr. Cooper Group notched a net profit of $658 million in the first quarter, due almost entirely to gains with mortgage servicing rights (MSR) and a deal with the fintech Sagent to create a cloud-native servicing platform.
During a conference call with analysts in April, Chris Marshall, vice chairman and president, said that reducing capacity is a reality for all originators, and hinted that future job losses were on the horizon.
“In the second quarter, you will see us taking charge of staff reductions related to our lower originations,” he said.
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In a recent public filing with the Securities and Exchange Commission, Mr. Cooper told shareholders that it expects to “roughly break-even” on net income for the second quarter, excluding potential mark-to-market gains on its MSR portfolio as well as severance charges.
The break-even on net income reflects “pressure on volumes and margins in its originations segment, while it continues to project strong growth in servicing segment pretax income culminating in a quarterly run-rate of $100-$120 million by fourth quarter,” the company said.
Dallas-based Mr. Cooper lowered its guidance on originations operating income in the second quarter to between $40-$50 million, down from its prior guidance of $65-$85 million.
The mortgage company laid off 250 workers in the first quarter as rising mortgage rates began to compress origination volume.
“While the mortgage industry experienced record high origination volumes in recent years and resources were scaled up to meet consumer demand, the industry now faces higher interest rates leading to lower originations volume,” a spokesperson for Mr. Cooper Group said in a statement in late April.
In a highly competitive market, lenders are cutting costs, mainly via layoffs. California-based Owning Corp., a direct-to-consumer lender acquired by Guaranteed Rate in February 2021, cut 108 jobs in three rounds from February to April. And it intends to add another 81 layoffs to the list. Other lenders also have reduced staff, such as Interfirst, Union Home Mortgage, Flagstar, Wells Fargo, Fairway and Better. Rocket has not laid off workers but has offered a voluntary buyout to some of its staff.
However, even in this economic environment, some companies are looking to expand their reach. Among them are Planet Home Lending, Geneva Financial and New Western.
