Flagstar Bank lays of hundreds in mortgage division

Flagstar Bank in Troy has laid off hundreds of employees in several states and is shuttering part of its national mortgage operation less than two months after merging with a New York bank, according to a news media report and social media posts.

A report in Housingwire.com, citing unnamed bank managers and staffers, said employees were told in a surprise conference call Thursday that Flagstar was closing its direct-to-consumer mortgage division and that many were now out of a job, although severance was offered based on tenure and job position.

The precise number of layoffs is unclear. A Flagstar Bank representative could not immediately be reached for comment Saturday by the Free Press.

Flagstar has in recent years been among the top 20 mortgage lenders in the country.

The layoffs report comes as the mortgage industry is experiencing a down cycle, with lenders in metro Detroit and across the country shedding staff in the past year amid higher mortgage rates and fewer opportunities for refinancing business.

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Flagstar was acquired Dec. 1 by New York Community Bancorp. in an all-stock deal, creating a combined bank said to be the nation’s 24th largest with 395 branches in nine states and about 7,800 employees and over $58 billion in deposits. The entire bank is slated to rebrand this year under the Flagstar name.

On the day the merger closed, Flagstar’s outgoing President and CEO Alessandro “Sandro” DiNello told the Free Press that there were no branch closures or “any notable reduction in force” planned in connection with the merger. DiNello is now nonexecutive chairman of New York Community Bancorp.’s 14-member board.

Bank executives may provide details about the layoffs and future plans for their mortgage division during New York Community Bancorp.’s next scheduled quarterly earnings call Tuesday morning.

The U.S. mortgage industry was expected to do about $2.2 trillion in mortgage originations last year, down significantly from the $4.4 trillion in mortgages in 2021, according to the Mortgage Bankers Association industry group. For 2023, mortgage originations are forecast to total $1.9 trillion.

Early last year, Flagstar cut its mortgage staff by 20%, or 420 people, as its volume of business started falling.

Some of the newly laid-off Flagstar employees have shared their unemployed status on social media, saying there was “no warning” and how their access to the company computer system was immediately shut off.

One Flagstar employee in metro Detroit said on Facebook that after surviving multiple rounds of layoffs in her 26-year career, “today the streak broke.”

“My job was eliminated. It pains me so much that it was at a time in my career where I was the happiest and felt I had so much to look forward to …. But onward and upward!!!”

Flagstar Bank was once a cosponsor of the annual Detroit Free Press Marathon.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl

Read More: Flagstar Bank lays of hundreds in mortgage division

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