open mortgage on Friday closed its decentralized retail pipeline and laid off more than two dozen employees. The unit’s closing comes 1 1/2 years after the Texas-based bank changed ownership and nine months after it exited the reverse mortgage business. The company will focus on the third-party origination (TPO) field in the future.
employees told housing line, The leadership announced the closure of its branch during an “all hands” call on Friday due to fears of retaliation. They received the meeting invitation 30 minutes in advance. Chief Executive Officer and President Christopher D’Auria confirmed the decision, saying it was not made “quickly or easily.”
“Earlier today, we announced to our team members that we have made the strategic decision to close the company’s decentralized retail pipeline, effective immediately,” D’Auria wrote in a letter to counterparties, which was reviewed by HousingWire .
“Those who have worked with us over the years have seen us operate in a profitable manner and we will continue to do so with an increased focus on our TPO channel before redeploying to retail in the future,” he added.
D’Auria said in a statement to HousingWire GenHome Mortgage Company Open Mortgage was acquired in February 2024.
Open, which has laid off 25 loan officers and has a monthly production volume of $5 million, will retain retail employees to close the segment’s pipeline. After that, there may be two more layoffs. Employees have been notified and will receive severance pay upon termination.
“Each loan officer was paid in accordance with their compensation agreement. We have made no public complaints regarding compensation to any state regulatory agency. Any assertion to the contrary is completely untrue,” D’Auria said. “For those companies affected by this closure, we will pay full commissions on applications received by August 9. Additionally, as confirmed by our Chief Financial Officer, all suppliers have received payment in a timely manner.”
According to D’Auria, the retail unit’s output accounts for less than 10% of the company’s total output. this National Multi-State Licensing System (NMLS) showed Open had seven LOs and 16 branches as of Monday morning.
Sources told HousingWire that Open decided to exit the decentralized retail channel because of mounting financial problems. They cited the company losing some warehouse lines, causing it to fail to comply with agency covenants.
D’Auria said the company “may have lost warehouse lines since before our acquisition because they were not operating profitably.” However, since February 2023, warehouse capacity has decreased, according to D’Auria An increase of $150 million.
In fact, Open has shut down its warehouse lines for reverse mortgages since exiting the reverse mortgage business in November 2023, as lower transaction volumes coupled with lower pull rates made it cost-prohibitive to close reverse mortgages. high.
June, U.S. Department of Housing and Urban Development (HUD) terminated federal housing administration (FHA) direct approval of the Iowa Open. Modex data shows the state accounted for just 3.2% of the company’s total sales in the past 12 months.
TPO business is the future of Open. Wholesale volumes are up 150% year-to-date, according to D’Auria, and the company’s current pipeline output is expected to double in the coming months.
“The company has made significant investments in our DREAM portal technology to complement the upcoming release of our new Dream Builder (GNMA DPA) product and our enhanced non-QM products,” D’Auria wrote to counterparties. “In addition, Open Mortgage will expand its TPO access services to provide non-principal agency services to our loyal and growing base of lending partners.”
