Better.com, the online mortgage lender, has made headlines once again as its CEO, Vishal Garg, announced a new wave of job cuts and the closure of the company’s real estate unit. This move comes as part of Better.com’s ongoing efforts to adapt to changing market conditions and shift its business model.
Since December 2021, Better.com has undergone a series of layoffs, resulting in the termination of more than 4,000 employees across the United States and India. The latest round of layoffs has affected the entire real estate team, although the exact number of employees impacted remains undisclosed at this time.
Reports indicate that Better.com had been planning to transition from an in-house agent model to a partnership agent model. The decision to shut down the real estate unit aligns with this strategic shift, allowing Better.com to focus on its core mortgage lending operations.
Unfortunately, affected employees have claimed to receive minimal or no severance packages, exacerbating their financial burden. Adding to their grievances, these employees had already experienced a significant salary reduction of more than 50 percent in November 2021 under the promise of job security. However, the company’s subsequent layoffs have shattered these assurances.
This is not the first time Better.com and Vishal Garg have faced criticism for their handling of workforce reductions. In December 2021, the CEO drew widespread condemnation for laying off 900 employees via a Zoom call. Then, in May 2022, Better.com offered employees the option to resign voluntarily, resulting in approximately 920 resignations.
In an attempt to address the challenges faced by potential homebuyers, Better.com collaborated with Amazon in March of this year. The partnership allowed Amazon employees to utilize their company shares through a program called ‘Equity Unlocker.’ By leveraging their vested equity as collateral, Amazon employees gained the ability to contribute towards the initial payment required for a mortgage. This innovative program aimed to overcome the limitation imposed by most banks and financial institutions, which typically do not consider equity as eligible for down payment calculations.
Vishal Garg attributed the frequent layoffs at Better.com to the current uncertain market conditions prevailing in the mortgage space, creating a challenging operating environment for the company. While the decision to downsize and focus on the core business may bring some stability in the long run, the impact on the affected employees and the manner in which the layoffs were executed has sparked criticism and raised questions about the company’s commitment to its workforce.
As Better.com moves forward with its new business model, industry observers will be closely watching how the company navigates the evolving mortgage landscape and manages the aftermath of these substantial layoffs.