New American Funding has laid off hundreds of employees across multiple rounds of workforce reductions this year, multiple former employees told HousingWire.
The most recent layoff came on Tuesday when the California-based lender eliminated several hundred positions, including loan officers, mortgage underwriters, processors and training specialists, multiple former employees said. The firm had 4,800 employees as of July 2021, and hired more than 1,190 workers in the first seven months of last year, New American said in a release at the time.
No Worker Adjustment and Retraining Notification (WARN) notices were submitted to California’s Employment Development Department (EDD).
After this story was published, New American Funding said in statement that it laid off 300 total positions across multiple locations this week, with most layoffs affecting mortgage operations positions.
“There’s an ebb and flow to the mortgage business,” New American Funding CEO Rick Arvielo told personnel, according to a company spokesperson. “We are currently ebbing, and the responsible thing we will do as a company is to work as hard as we can to stay right sized for the business that is coming in. We have to be very deliberate on the size of this business and the personnel to run it depending on the deal flow coming in.”
Founded in 2003 by Arvielo and his wife Patty Arvielo, New American Funding offers a variety of conventional, government, adjustable-rate and non-qualified mortgages. Licensed in 49 states across the nation, the lender has 159 active branches nationwide and originated $31.8 billion in mortgages in 2021.
In June of last year, New American Funding announced plans to expand its footprint across much of the country by hiring LOs and other sales staff. But, as is the case for virtually all mortgage lenders, origination volume began to drop as mortgage rates climbed.
According to data from Inside Mortgage Finance, New American Funding originated $9.1 billion in the first six months of 2022, down 42.7% from the first six months of 2021.
More than ever lender profitability requires maintaining pace with innovation
Lenders continue to face tightening profit margins as interest rates stay substantially higher than they were last year. In light of this, HousingWire recently caught up with Teraverde’s Rob Peterson to learn more about what lenders need to succeed in today’s lending environment.
Presented by: Teraverde
“In 2021 I was reviewing about 50 to 100 loans a day,” said a former disclosure specialist who was laid off earlier in 2022. “Early this year I began to review around 30 to 50 and that continued to decline.”
Multiple rounds of layoffs happened in the early part of 2022, former employees said. New American Funding confirmed that job cuts began in January and have occurred every month since. A spokesperson said a total of 625 workers have been cut since the start of the year, and WARN notices were not triggered.
“Since the mortgage business has slowed down, we’re doing a reduction in force is what they [human resources] told me,” said an employee who was notified of her layoff on Tuesday morning. Employment termination was effective Aug. 2 and no severance payment was offered, according to a separation document reviewed by HousingWire.
With less origination volume, the lender put stricter payout standards for positions including senior processors in the beginning of the year, former employees said.
“We were paid out on every file we did last year,” a former employee said. “Earlier this year, around March or April, they cut that back saying we couldn’t get paid out on anything unless we closed over 11 loans a month. Last year when it was busier we were able to close 20 to 30 no problem but with the economy as it is, it was a struggle to hit 10.”
Privately held New American Funding is hardly the only mortgage lender to make sizable cuts to its workforce this year. A recent Mortgage Bankers Association survey found that cost-cutting was the top priority for most lenders. Many lenders staffed up considerably to handle the historic levels of business in 2020 and 2021, but find themselves bloated for the amount of business they’re currently handling.
loanDepot, a top-10 lender, plans to eliminate 4,800 jobs, about 40% of its workforce, to return to profitability. Digital mortgage lender Better.com laid off more than 4,000 employees since December. Even Rocket Mortgage, easily the country’s largest lender, offered voluntary buyouts to 2,000 workers earlier this year.
With a nosedive in mortgage origination volume, lenders including Pennymac, Mr. Cooper, Guaranteed Rate and Fairway Independent Mortgage conducted at least one round of reduction in force and First Guaranty Mortgage Corp (FGMC) filed for bankruptcy in June after laying off nearly 80% of its workforce in a virtual meeting.
Editor’s note: This story was updated on Friday, August 5 at 9:30 a.m. to include comments from New American Funding.
