Mr. Cooper Group Inc., one of the largest servicers and originators of home loans in the nation, saw its earnings and revenues sink in the second quarter as demand for mortgages plummeted. That led the company to cut almost 700 jobs since the start of this year.
Coppell-based Mr. Cooper laid off 420 staff members in the second quarter and 250 in the first quarter, mostly employees who worked in originations, the company confirmed to The Dallas Morning News. Industry publication Asset Securitization Report first reported the second-quarter layoffs in June. Mr. Cooper officials did not address the layoffs in its quarterly earnings call Wednesday, other than a mention of $3 million in severance charges.
“The mortgage industry is facing an environment of rapidly increasing interest rates and rising inflation, which has resulted in decreased originations volumes across the entire industry,” the company said in an emailed statement. “It is with deep regret that we needed to eliminate positions in the second quarter as part of our efforts to manage costs and ensure we position the company for long-term success.”
A Worker Adjustment and Retraining Notice filed with the state of California shows 120 of those cuts were at Mr. Cooper’s office in Santa Ana, Calif.
Mr. Cooper had about 8,000 U.S. employees as of the second quarter.
Mr. Cooper’s earnings were down 77%, from $658 million in the first quarter to $151 million in the second, the company reported Wednesday. Its revenues sank 43%, from $1.05 billion in the first quarter to $599 million in the second.
The company funded 29,154 loans in the second quarter, down from 46,933 loans in the first quarter. It earned $63 million in pre-tax income from originations during the second quarter, down from $157 million in the first.
The company, previously known as Nationstar Mortgage, sees a potential recession as a chance to expand its business. CEO Jay Bray said the company’s portfolio growth started to take off during the last financial crisis as it took on large, distressed portfolios from top banks.
“In a severe recession, I’d expect to see a shakeout among servicers who don’t have our capabilities, and I believe that would lead to new growth opportunities for us, just like you saw after the last crisis,” Bray said.
The company’s servicing business earned it $30 million in pre-tax income, up from $7 million in the first quarter, which Bray said was due to the rise in interest rates.
Mr. Cooper serviced $804 billion in loans as of the second quarter, up 1% from the previous quarter and 23% from a year earlier. It eventually wants to be servicing $1 trillion in loans.
“This steep ramp in servicing income is a huge benefit in this transitional environment given the obvious pressure on originations,” Bray said.
Another North Texas-based mortgage company, First Guaranty Mortgage Corp., laid off more than 400 employees in June and filed for bankruptcy, citing the changing market.
