Mr. Cooper, which had 8,200 employees at the end of last year, laid off 250 workers from its lending business during the first quarter and announced another 420 layoffs in June.
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Loan servicing and mortgage lending giant Mr. Cooper announced another round of layoffs Thurdsay, saying it’s eliminating approximately 800 positions in loan originations to adjust to falling demand for home loans.
“In the face of market volatility and economic uncertainty, Mr. Cooper Group has taken a disciplined and proactive step to scale back the originations business, including the elimination of approximately 800 positions,” the company said in a statement. “By aligning our originations operations to the smaller mortgage market, we can thoughtfully and effectively meet the needs of our current customers.”
In announcing third quarter earnings last week, Mr. Cooper CEO Jay Bray called this year’s rise in mortgage rates “the most extreme shock the industry has experienced in its history,” and warned of more cost cutting ahead.
“Mr. Cooper operates with a balanced business model including both Servicing and Originations, and while we are adjusting capacity in the short term, our Originations platform remains central to our long-term strategy,” the company said Thursday. “We have a long history of successfully navigating different cycles, and we are confident these changes will further our ability to invest and grow in the future.”
Most of Mr. Cooper’s revenue comes from loan servicing — fees it collects for collecting loan payments from mortgage borrowers.
To help grow its mortgage servicing portfolio, Mr. Cooper acquires mortgages originated by correspondent lenders, and also “recaptures” borrowers by offering refinancing directly to homeowners it collects payments from.
As interest rates have soared, Mr. Cooper’s direct lending business — refinancing homeowners’ existing loans — has contracted by 63 percent from a year ago, with just $3.6 billion in loans funded during the third quarter. Over the same period, Mr. Cooper has cut correspondent loan production even more drastically, to $2.1 billion — a 79 percent drop from a year ago.