Rocket Mortgage to trim workforce as home-loan market shrinks
The country’s largest lender is looking to reduce its workforce amid a shrinking mortgage market following 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, mostly in Detroit.
The affected employees are primarily in Rocket Mortgage’s operations team and groups within Amrock, officials said. The buyout program was first reported by Crain’s Detroit Business.
“One of our responsibilities as a company is to provide our team members a fulfilling career, and we have been able to do that for tens of thousands in the last 36 years,” Mike Malloy, chief administrative officer at Rocket Central, said in a statement Monday. “Over that time, we have been through several market cycles — similar to those the industry is experiencing today.
"As a result of today’s market, some team members have told us they are considering a move 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 right now, while the housing market normalizes after two years of unprecedented volume.”
The buyout offer will include several months of pay; full medical, dental and vision coverage until November; payment for banked personal time off; early vesting of stock that employees received at the company’s initial public offering, as well as career coaching, resume building and job search assistance.
The job-reduction program comes as mortgage companies feel the impact of rising interest rates and low for-sale housing inventory following years of record origination volume amid a refinancing boom that occurred roughly the past two years. Last week, the average 30-year mortgage rate rose past 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's running at a four-decade high.
Other mortgage lenders have turned to involuntary job reductions as the business contracts. Last month, New York-based Better Mortgage's Better Holdco Inc. announced 3,000 layoffs — a third of its employees — in the U.S. and India. The layoffs came after the company fired 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 Better Holdco's late 2021 layoffs: "... we're not going to have a conference call where all of a sudden we let a group of them know they're not going to be working here any longer," 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 record loan volume last year, Rocket Companies Inc. recorded $12.9 billion net income in 2021, a 35% decrease year-over-year. The mortgage giant's stock closed Monday at $9.39, up 8.3%.
Staff Writer Breana Noble contributed.