Industry-leading reverse mortgage lender American Advisors Group (AAG) instituted a round of layoffs this week, the second such instance since June that impacted the company’s reverse mortgage employees, according to multiple sources.
When reached, representatives for the company declined to comment, nor did they provide any additional details.
Current and former employees described the action as a “mass layoff,” striking at several different levels of the organization this week, including on Thursday afternoon. Social media posts from affected employees included jobs listed in the company’s brand strategy and loan processing divisions.
No additional details about the layoffs are known. It remains unclear how many jobs were shed, though the company has around 1,500 employees according to an internal estimate previously provided to RMD. Sources indicated that hundreds of employees were impacted by the layoff round in June.
California-based AAG is the top reverse mortgage lender in the nation, with 18,390 endorsements over the 12-month period ending in July 2022, according to data compiled by Reverse Market Insight (RMI).
According to a professional who requested anonymity, a company executive described this layoff round as a major event that is impacting all levels of the organization. The previous layoff round in June was also described by an employee as one which affected all departments and was focused on the reverse business, which took place on the heels of a prior round that affected AAG’s traditional/forward mortgage business.
AAG is the latest in a vast list of forward and reverse mortgage lenders trimming their workforces. Rising mortgage rates and dropping origination volume have led to thousands of industry job losses over the last eight months.
They’re also not the only reverse mortgage lender affected by multiple layoff rounds in a relatively short period of time. In June, multi-channel lender Open Mortgage cut 14 employees primarily tied to the lender’s forward mortgage operations, and the following month made additional workforce cuts that impacted both the forward and reverse mortgage divisions.
Public companies active in the reverse mortgage industry including Ocwen Financial and Finance of America Companies (FOA) also separately reported losses in Q2 2022, though each credited their respective reverse mortgage divisions with adding to portfolio diversity and profitability when compared to the current forward business.
These layoffs come at a time of change for the reverse mortgage industry, which had spent the better part of two years benefitting from a boom of Home Equity Conversion Mortgage (HECM)-to-HECM (H2H) refinance transactions as seniors were impacted by notable gains in home equity, while the mortgage industry broadly enjoyed historically low interest rates.
Now that the “refi boom” has cooled, looking at the numbers of new customers engaged in the business is key, but on that basis alone, the numbers of new customers in 2021 remained similar to the same figure from 2019, which saw low endorsement volume. This is according to John Lunde, president of RMI.
“While refis have been great, we also [need to ask] how we can get to those next borrowers,” Lunde said at an industry conference last month. “Not the same borrowers again, though we should definitely serve them. When a refinance makes sense, great. But, we can’t lose sight [of the fact] that this industry needs to grow. That’s the only way to succeed as a whole industry and as individual professionals.”