Flagstar Bank Pulls Plug On Retail Mortgage Lending. The Michigan-Based Bank Lays Off Hundreds Of Employees
Flagstar Bank employees posted on social media that the bank has pulled the plug on mortgage lending. The bank also fired or laid off hundreds of employees.
Flagstar’s move comes nearly two months after receiving the Fed approved a merger with New York Community Bank.
Flagstar commenced with the layoffs on Thursday morning with no warning. The bank also immediately cut off access to the company’s systems, computers, and emails. However, the company did offer severance payments based on tenure and job position.
The mass layoffs also included senior management.
Flagstar was ranked number 19 among mortgage lenders in America. New York Community Bank is one of New York City’s largest multifamily lenders. The two companies announced the $2.6 billion merger deal in April 2021.
The OCC approved the merger in late October. This was followed by the Fed in November.
Flagstar originated $27 billion in mortgages last year. However, this is down about 38% year-over-year. Like its competitors, Flagstar’s performance deteriorated as time went on. This translates to $12.1 billion in 2022.
The bank originated $6 billion in the first nine months of 2022 through the retail channel. This down 54% year over year, per IMF data. Meanwhile, the wholesale channel reached $17 billion in the same period. This was down 35%.
Following the OCC’s approval for the merger in October, Flagstar said the combined company would operate its mortgage division nationally through 81 retail lending offices in 26 states. The wholesale network had approximately 3,000 third-party originators.
According to the companies, the merger creates one of the largest regional banks in the U.S., operating 395 branches across a nine-state territory, including the Northeast and the Midwest, with exposure to high-growth markets in the Southeast and West Coast.