The nation’s largest lender is looking to cut its workforce amid a mortgage market contraction after two years of record loan volume.
Officials said Monday that Detroit-based Rocket Mortgage and Amrock, its title company, are offering voluntary buyouts to 8% of employees. Rocket Companies, which includes Rocket Mortgage, employs 26,000 people, most of them in Detroit.
The affected employees are primarily in Rocket Mortgage’s operations team and in groups within Amrock, officials said. Crain’s Detroit Business first reported on the buyout program.
“One of our responsibilities as a company is to provide our team members with fulfilling careers, and we have been able to do so for tens of thousands over the last 36 years,” Mike Malloy, managing director of Rocket Central, said in a statement. Monday statement. “During that time, we have been through several market cycles, similar to what the industry is experiencing today.
“As a result of the current market, some team members have told us that they are considering moving to another position or a completely different industry. At the same time, our career growth options in certain areas of Rocket Mortgage and Amrock are limited at this time, while that the housing market is normalizing after two years of unprecedented volume”.
The purchase offer will include several months of payment; Comprehensive medical, dental and vision coverage through November; payment for accrued personal time off; early purchase of shares that employees received in the company’s initial public offering, as well as career guidance, resume writing, and job search assistance.
The job-cutting program comes as mortgage companies feel the pinch of rising interest rates and low inventory of homes for sale after years of record origination volume amid a refinancing boom that occurred approx. in the last two years. Last week, the average 30-year mortgage rate rose more than 5%, up from less than 3% a year ago, reducing the number of homeowners able to refinance their mortgages.
Even higher mortgage rates could be on the horizon. Federal Reserve Chairman Jerome Powell signaled last week that the central bank is likely to implement sharp interest rate hikes to combat inflation that is at its highest level in four decades.
Other mortgage lenders have resorted to involuntary job cuts as business contracts. Last month, New York-based Better Mortgage’s Better Holdco Inc. announced 3,000 layoffs, a third of its employees, in the US and India. The layoffs came after the company laid off more than 900 employees via a mass Zoom call in December.
During Rocket’s fourth-quarter earnings call in late February, CEO Jay Farner referenced the Better Holdco layoffs in late 2021: “…we’re not going to have a conference call where all of a sudden , we informed a group of them that they are not going to work here anymore,” he said. “That’s just not how we do this. That profitability is important, but the investment in our team members is the most important thing that leads to the future growth of this organization.”
Despite last year’s record loan volume, Rocket Companies Inc. posted net income of $12.9 billion in 2021, a 35% year-over-year decline. Shares of the mortgage giant closed Monday at $9.39, up 8.3%.
Staff writer Breana Noble contributed.