Better.com, the online mortgage company, announced Tuesday that it is taking the “hard step of simplifying” its operations and laying off about a third of its workforce, totaling about 3,000 jobs.
The company, which gained notoriety last year after its CEO fired 900 employees over Zoom just before Christmas, expanded rapidly during the pandemic when interest rates were low.
However, in a letter posted on Better’s website, the company said Tuesday’s layoffs were prompted by a “dramatic drop in origination volume due to rising interest rates,” interim chairman Kevin Ryan said.
“Unfortunately, this means that we must take the difficult step of further simplifying our operations and reducing our US and Indian workforce substantially,” Ryan wrote.
“This decision is strongly driven by the headwinds affecting the residential real estate market,” he added.
Mortgage rates have recently increased, rising to a level not seen since the summer of 2019.
The 30-year fixed-rate mortgage averaged 3.92% in the week ending February 17, up from 3.69% the week before, according to Freddie Mac. Rates are rising because of high inflation and stronger-than-expected consumer spending.
Better said that affected employees will be notified individually over the phone, potentially preventing another PR disaster like the one that followed CEO Vishal Garg’s decision to carry out a mass layoff via Zoom.
They will also be eligible for extended medical benefits, severance pay and a “set of services” to help them find new employment.
However, some workers were unwittingly notified of their dismissal after seeing a severance pay in Better’s internal payroll system or in their bank accounts prior to the official announcement, according to TechCrunch.
“This was certainly not the form of notification we intended and resulted from an effort to ensure that affected employees received compensation as quickly as possible,” according to a person familiar with the flaw.
In December 2021, Garg held a video call in which he laid off 9% of Better’s workforce.
“If you’re on this call, you’re part of the unlucky bunch that’s getting fired,” Garg said. “Your employment here is terminated, effective immediately.”
Garg briefly moved away from his position, but returned to it in January.
Better.com has already been valued at $6.9 billion. The company ranked first on LinkedIn’s Top Startups list for 2020 and 2021.
The Softbank-backed mortgage lender is trying to go public, though those plans have been delayed due to fallout from Garg’s handling of the December layoffs, according to Bloomberg.
Source: CNN Brasil
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