Better cuts mortgage sales team 2 weeks after $500M SPAC raise

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Saying it expects the mortgage market to continue to get tougher, tech-based mortgage lender Better has reportedly laid off one-quarter of its U.S. mortgage sales and origination team, with pink slips going out just two weeks after the company closed a special purpose acquisition company (SPAC) merger that netted more than $500 million in funding.

“As a publicly listed company, we’re focused on making prudent and disciplined decisions that account for market dynamics so that we can continue to serve both customers and shareholders for the long-term,” a spokesperson for Better said in a statement provided to Inman. “New projections and remarks from chair Jay Powell signal no near-term relief from elevated borrowing costs, so the mortgage market will continue to get tougher.”

Better declined to comment on the number of workers affected. Citing two anonymous employees, Business Insider reported that after the Sept. 6 layoffs, the company’s mortgage originations team employed 75 workers in the U.S., plus some additional employees based in India. Better confirmed that it told Insider that the team currently employs “over 100 people.”

According to records maintained by the Nationwide Multistate Licensing System, Better Mortgage Corp. sponsors 83 mortgage loan originators working out of nine active branch locations.

In the leadup to its Aug. 24 SPAC merger, Better revealed that it had reduced its global headcount by 91 percent in the past 18 months, from a peak of 10,400 workers in the fourth quarter of 2021 to a total of 950 team members as of June 8. Of those, about 410 were located in the United States, 420 in India and 120 in the United Kingdom.

Of the 400 Better team members working in U.S. mortgage production roles in June, about 170 were located in the U.S. and 230 in India. Most of the approximately 150 Better team members engaged in technology and product development were based in the U.S., the company said.

B2B partners account for nearly half of originations

Founded in 2015, Better made a name for itself with homeowners refinancing their existing mortgages, by providing an easy online application process and offering competitive rates. But as interest rates soared last year and lenders scrambled to serve homebuyers, Better saw its purchase loan volume fall off more drastically than the industry as a whole.

In search of more profitable loans, Better has become more reliant on its “B2B” (business-to-business) channel. After going public, Better disclosed it now depends on B2B partnerships with companies like Ally Bank and American Express for nearly half of its business.

Before closing its SPAC merger deal, Better co-founder and CEO Vishal Garg told Inman the company would use some of the more than $568 million in proceeds to hire mortgage loan officers, coordinators, processors and underwriters and “aggressively” partner with real estate agents to grow its business.

Better’s B2B channel accounts for 43% of originations

Better H1 2023 originations by channel

Source: Better Home & Finance earnings report.

In a statement provided to Inman Monday, a spokesperson for Better said that the company remains committed to “hiring more seasoned professionals who can sell in this tough mortgage environment,” and making them “10 times more productive” through continued investment in technologies such as Tinman and One Day Mortgage.

Garg unveiled the new “One Day Mortgage” product in January at Inman Connect New York, claiming that Better’s Tinman Marketplace gives it an edge by linking underwriting to mortgage investor requirements and bids.

Better’s technology has “created efficiencies that streamline and automate nearly every major function of homeownership,” a Better spokesman said Monday. “We are committed to further developing this technology during an interest rate environment where customers need it the most.”

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