The country’s two largest mortgage lenders – both based in the Detroit metro area – cut thousands of jobs as mortgage business went from boom to bust, filings show. recently by companies.
Dan Gilbert’s Rocket Companies, the parent company of Detroit-based Rocket Mortgage, formerly known as Quicken Loans, cut its workforce to about 18,500 people as of Dec. 31 from 26,000 a year earlier.
During the same period, United Wholesale Mortgage, based in Pontiac, reduced its workforce from 8,000 to about 6,000.
Those employment numbers were cited this week in annual statements that publicly traded companies have filed with the Securities and Exchange Commission.
Plummeting headcounts at Rocket and UWM underscore the cyclical nature of mortgage business and this potential impact on the local economy, given that the #1 and #2 lenders in the industry are based here.
Almost all of UWM’s workforce is located on the company’s campus in Pontiac, where employees walk between buildings – and over Boulevard Sud – on the longest closed pedestrian bridge in the world. world.
Rocket is headquartered in downtown Detroit, and much of its workforce resides in the area. It is considered the largest employer in the city of Detroit. Yet its workers are more geographically dispersed than those of UWM.
According to SEC filings, Rocket Companies has a network of 16 corporate offices, 11 “customer support sites” and four call centers in the United States and Canada. Some of these offices are for holding companies under the Rocket Companies umbrella that don’t underwrite mortgages, such as Rock Connections, Rocket Auto, and Rocket Money, formerly known as Truebill.
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Rocket and UWM felt the slowdown in mortgage activity that began in late 2021 and accelerated in early 2022 as interest rates rose, home sales slowed and activity mortgage refinancing was drying up.
The end of the 2020-21 refinance boom was particularly painful for Rocket because it did a lot of refinances and refinances can be very profitable. Last year, Rocket issued $133 billion in mortgages, down 62% from 2021. The company’s net income, or profit, for 2022 was $700 million, down from 6 .1 billion in 2021.
Over the past two quarters, UWM has originated more mortgages than Rocket, snatching what had been Rocket’s crown as the nation’s No. 1 mortgage lender. Rocket had held that title since 2018, when it overtook Wells Fargo.
UWM says its downsizing is the result of declining hiring and steady “attrition,” not layoffs.
The Pontiac Corporation this week reported net income, or earnings, of $932 million for all of 2022, compared to $1.6 billion in 2021.
Stroke to cut
Rocket, which reported its first quarterly loss since its 2020 IPO this week, has been scrambling to cut spending amid falling revenue.
Those cuts included a 24% year-over-year reduction in marketing and advertising and a 17% reduction in salaries, commissions and benefits, according to SEC filings.
Rocket incurred $81 million in additional costs in 2022 related to employee buyouts.
During an earnings call on Tuesday, Rocket Chief Financial Officer Brian Brown appeared to indicate that the company plans to keep its workforce at its current level. Industry insiders often refer to workforce size as “capacity.”
“As we think about capacity, we think we are in a good position right now. We think we’re ready for home buying seasons,” Brown said.
A representative for the Rocket did not respond Thursday to a request for comment on its roster cuts.
As for UWM, the company’s CEO, Mat Ishbia, has repeatedly said that UWM has never laid off and never will.
“Based on market conditions, we no longer need to hire aggressively to grow our business and support our customers,” a company spokesperson said in a written statement Thursday. “Through natural attrition, for a variety of reasons – relocation, family commitment, new opportunity, etc. – our team numbers have balanced out. It is important to note that our hiring classes now include 50 to 100 new team members, whereas before 400-500.”
For years, Troy-based Flagstar Bank has been another nationally ranked mortgage lender in metro Detroit.
In January, the bank announced that it had restructured its mortgage division and laid off 10% of all bank employees, including some in metro Detroit, due to the nationwide downturn in the mortgage business.
Flagstar’s mortgage division had fewer than 800 employees after the restructuring announcement, down from 2,100 in 2021, the company said.
Another publicly traded local mortgage lender, Ann Arbor-based Home Point Financial, has made several staff cuts since 2021 and is expected to release full 2022 results on March 9.