Dive Brief:
- Insurance and financial services company USAA is cutting 130 jobs in its mortgage division, the San Antonio Express-News reported Thursday.
- The move marks at least the second round of cuts in the home-lending unit in the past year, and the third for the company in the same time frame. USAA shed 90 jobs in its mortgage arm last March amid projections of a 34% drop to some 25,000 real estate loans. The firm also made an unspecified number of cuts across several departments in August.
- “To continue exceptional service to our members, we sometimes make hard business decisions to ensure we are adapting to our members’ needs and changes in the marketplace,” Brad Russell, a USAA spokesperson, said in a statement. “Sometimes that means investing more heavily in growth areas and scaling back or stopping work in others.”
Dive Insight:
San Antonio-based USAA said the cuts represent 1.6% of its total bank workforce.
The firm’s total real estate loan portfolio has shrunk over the past several years. The company reported nearly $3.1 billion in real estate loans at the end of 2022, compared with $6.3 billion at the end of 2019, according to the San Antonio Express-News.
USAA is supporting affected employees with a paid transition period and career workshops, Russell said. The firm is also encouraging eligible employees to apply for other open roles at the company, he said.
USAA’s latest round of home-lending cuts follows an industry trend, as rising interest rates continue to hamper consumer demand for mortgages and refinancing, forcing lenders to contract operations in the space.
Wells Fargo last month unveiled plans to streamline its mortgage business to focus on existing customers and nonwhite communities. The bank has initiated several rounds of layoffs since April.
JPMorgan Chase and Citi launched job cuts of their own last year.
New York Community Bank, which acquired Flagstar Bank in December, announced Tuesday it is closing 69% of that bank’s retail home-lending offices and shifting to a branch-only model for that sector.
The move follows reports by HousingWire and the Detroit Free Press that hundreds of Flagstar’s mortgage employees were let go with “no warning” last week.
Not all lenders, however, have decided to pull back from the space.
In a move that bucks convention, USAA’s San Antonio-based neighbor, Frost Bank, is relaunching its mortgage unit this year, after exiting the sector more than 20 years ago.
As part of a soft launch, the $52.9 billion-asset bank is offering residential mortgages to Frost employees. The bank plans to offer home loans more broadly to current and new Frost customers this year, Blair McGrain, the bank’s chief marketing officer, told Banking Dive last month.
Frost’s return to mortgage lending comes as the bank carries out an aggressive expansion plan in several major Texas cities.
“Frost is not your little sleepy community bank anymore,” McGrain said. “We’re getting really big, we’re expanding like crazy throughout Texas. And [mortgage] is something we need and want to offer.”
