First Guaranty Mortgage Corp. gutted its workforce Friday in one of the largest and swiftest industry layoffs this year, blaming significant operating losses for slashing 75% of its payroll.
The Plano, Texas-based lender disclosed the termination of 428 of its 565 employees in a Worker Adjustment and Retraining Notification filed in Texas Friday and posted Monday. The layoff was first reported by HousingWire. The company confirmed the layoffs in a brief statement sent to National Mortgage News but didn’t release the number of affected employees.
“FGMC has experienced significant operating losses and cash flow challenges due to unforeseen historical adverse market conditions for the mortgage lending industry, including unanticipated market volatility,” Cassie Vacante, the company’s senior vice president of human resources wrote in the WARN notice.
The lender last Thursday gave affected staff their final paychecks but blocked access to the online system, so they were unable to see why allegedly they received a larger amount than normal. FGMC also told employees the office would be closed Friday, according to former workers who spoke on the condition of anonymity to National Mortgage News. The layoff announcement was reportedly made by CEO Aaron Samples in an approximately 10-minute prerecorded Microsoft Teams message.
The company did not address the allegations in an emailed statement Tuesday.
“FGMC is continuing to fund loans and engage actively with its consumers,” a company spokesperson said. “We want to clarify that we have paid salaries, accrued PTO, and commissions that have come due and are in the process of making severance payments to those who are eligible.”
The WARN notice included a redacted list of which job titles were cut, and former staff allege Friday’s cuts involved employees from all departments and positions.
An effort to obtain funding to prevent the layoff was unsuccessful, the WARN notice said. Investment giant PIMCO, which bought a stake in First Guaranty in 2015, did not respond to a request for comment.
FGMC less than two weeks ago announced a new fixed-rate second-lien product to its distributed retail, consumer direct and mortgage broker loan channels. A former worker alleged the company’s wholesale channel was receiving daily loan submissions in the single digits in the weeks leading up to the layoff.
The company’s mass firing Friday was one of the larger single-day firings amid the latest industry cycle of cuts over rising interest rates and other market uncertainties. JPMorgan Chase laid off hundreds of home lending employees, although the final tally was undisclosed, while brokerages Compass and Redfin earlier this month cut 450 and 470 workers each.
First Guaranty’s alleged Microsoft Teams announcement is reminiscent of digital lender Better.com’s firing of 900 workers in a Zoom call last year. That move that drew enormous scrutiny and may have violated California’s WARN notice law, according to a recently-filed lawsuit.