LoanDepot’s Anthony Hsieh (iStock, LoanDepot)
Another lender is resorting to layoffs as the mortgage market shrivels.
Tucked in near the end of a business plan released Tuesday morning, loanDepot announced it would shed 4,800 people, or 42 percent of its workforce.
About 2,800 of them have already been sent packing as the firm slashes headcount to 6,500 from 11,300. With demand for mortgages dropping, the company plans to make between $3.5 million and $4.5 million in severance and benefits payments in the second quarter alone.
“After two years of record-breaking volumes, the market has contracted sharply and abruptly in 2022,” loanDepot CEO Frank Martell said in a statement. “We are taking decisive action to meet this challenge head on.”
The company expects to save $375 million to $400 million annually by the end of the year by downsizing and other cost-cutting measures, such as reducing marketing, third-party spending and office space.
Additional changes involve centralizing the management of loan originations and fulfillment.
LoanDepot is targeting a return to run-rate profitability by the end of the year. The company is expected to release its second quarter earnings on Aug. 9.
Layoffs in the home loan industry have become a regular occurrence as rising mortgage rates and home prices and a dearth of listings cooled demand for home loans.
Last week, Long Island-based Sprout Mortgage announced it was going out of business. That came only a week after Texas-based First Guarantee Mortgage essentially shut down operations after making deep cuts to its staff.
Other companies reducing their mortgage personnel include JPMorgan Chase, Wells Fargo, Keller Williams and Better.com.
Still, the optics of loanDepot’s layoffs are not good, as they follow loanDepot founder Anthony Hsieh’s $30 million purchase of a waterfront Miami Beach mansion in January. Hsieh also bought a unit at One Thousand Museum in Miami for $19.5 million.
