Two more real estate players have made significant cuts in response to diminished mortgage activity and tepid origination projections for the upcoming year.
New York-based Orchard laid off 180 staffers last week, a move in response to the fastest mortgage rate rise in the past 100 years dampening demand, it confirmed Monday. It’s the second headcount reduction by the power buyer this year after the firm let go 100 employees in June across its mortgage, title and insurance platforms. Orchard as of Monday counts 694 workers on LinkedIn.
“Forecasted industry volume for 2023 is substantially less than the past few years, and will require us to slow growth, reduce costs and set ourselves up to weather the uncertainty ahead,” the company said in a LinkedIn post last week. “The changes we made today were just one of many other cost-cutting measures and [they] help ensure that Orchard will be able to help homeowners and drive our mission forward for years to come.”
The Mortgage Bankers Association last month projected $2.257 trillion in volume by the end of the year, a dramatic fall from last year’s $4.4 trillion in originations, but more than the $2.047 trillion predicted for 2023. Originations are expected to rebound in 2024.
A spokesperson Monday didn’t disclose which departments were impacted, but said departing personnel were offered severance pay, extended health care benefits and optional job transition support. The company didn’t say whether it would file a Worker Adjustment and Retraining Notification in any state. The layoff was first reported by Inman.
Orchard backs customers’ home purchases with cash while it sells their old home, while charging a fee similar to a broker’s. The company was founded in 2017 as Perch before rebranding in 2020 and was valued at $1 billion last September after a $100 million Series D funding round. It also announced in September a lender partnership program with participation from Lower and Wyndham Capital Mortgage, among others.
Meanwhile, cash-offer fintech Ribbon is making a substantial cut, bringing its payroll to under 30 employees, a spokesperson confirmed Monday afternoon. The company didn’t disclose how many personnel were affected, but it shows 262 employees on LinkedIn. The company is also temporarily pausing its RibbonCash program as it revamps its offerings.
“This is a re-balance and the reduction in force is the first and most painful part of that,” the firm said in a statement. “Ribbon’s path forward is rooted in focusing on concepts that add more dexterity to the portfolio of homeownership offerings, to complement our flagship RibbonCash offerings.”
A WARN filing “would not apply” to the headcount reduction because of the company’s remote workforce, it said. The impending layoff was first reported by Business Insider, while the cash offer suspension was first reported by Inman.
The New York-based Ribbon terminated 136 workers in late July, a decision it attributed to then-already declining mortgage activity and rising rates. The fintech has raised $625 million since it was founded in 2017 and operates in metropolitan areas in 16 states.
The mortgage sector is reeling from another wave of layoffs following the third quarter earnings reporting period, including large headcount reductions by major lenders. At least 58 companies in real estate and housing finance have laid off a combined 20,000-plus employees, a number likely to grow significantly.