Two months after receiving the Federal Reserveapproval to merge with community Bank Of New York, Michigan-based flag star bank is reducing its presence in the retail channel and laying off hundreds of employees, according to laid-off employees.
“Just got word this morning that the company is removing retail outside of where the bank footprint is,” a former Flagstar Bank regional manager posted on social media.
One former mortgage underwriter wrote: “Flagstar just laid everyone off, so after two and a half years, I’m back on the job market.”
The layoffs occurred Thursday morning without warning, according to former employees. His access to company systems, computers, and emails were immediately shut down. The company offered severance payments based on seniority and job position.
“Hundreds of us were told to take a call this morning at 11:00 am, and they told us they were going to shut down the retail division of Flagstar Mortgage,” a former loan officer told HousingWire. “We were denied access immediately after the call, so we couldn’t access our computers or contact information. It was a big surprise for all of us.”
A Flagstar Bank spokesman did not respond to a request for comment Thursday. HousingWire found no Worker Adjustment and Retraining Notice (WARN) related to the layoffs.
It was not immediately clear if Flagstar had cut staff in areas where the bank has no physical presence or if the cuts include branch territories.
Flagstar, the 19th largest mortgage lender in the United States, and New York Community Bank, one of New York City’s largest multi-family lenders, announced a $2.6 billion merger agreement in April 2021.
He Comptroller of the Currency passed the merger in late October, followed by the Fed in November.
Flagstar originated $27 billion in mortgages last year, down 38% year-over-year, according to figures from Within mortgage finance. Like its competitors, Flagstar’s performance deteriorated over time, falling from $8.2 billion from January to March 2022 to $4.1 billion from October to December 2022.
The bank originated $6 billion in the first nine months of 2022 through the retail channel, down 54% year-over-year, according to IMF data. Meanwhile, the wholesale channel reached $17 billion in the same period, down 35%.
Following OCC approval for the fusion In October, Flagstar said the combined company would operate its mortgage division nationwide 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 US, operating 395 branches across a nine-state territory, including the Northeast and Midwest, with exposure to high-growth markets in the Southeast and the west coast.
