Guaranteed Rate continues layoffs during market downturn

Chicago-based mortgage company Guaranteed Rate has been quietly laying off employees across the country for more than a year, according to former and current Guaranteed Rate employees.

The Tribune spoke with more than a dozen current and former employees, and many told the Tribune that layoffs have happened several times in recent weeks, with entire teams wiped out. More layoffs are potentially on the horizon, and company morale is “in the toilet,” as one current employee put it.

“We’ve had progressive layoffs since early 2022 in an effort to right-size for the volume that existed in the industry,” said John Palmiotto, Guaranteed Rate’s chief of retail production until his resignation last week. “In fairness, we probably hired more people in the earlier years during COVID than other companies. We staffed up significantly to meet the demands that we had at that time,” adding that the company “probably did” overstaff.

The layoffs come at a time when the hot pandemic-era housing market has turned on its head, with the average for a 30-year fixed loan skyrocketing to more than 7% on more than one occasion, keeping would-be sellers in their homes, buyers without homes to purchase and a mortgage industry with a lot fewer loans to close.

In a statement to the Tribune, CEO and founder of Guaranteed Rate Victor Ciardelli acknowledged the layoffs and said they happened for two reasons: high mortgage rates led to a decrease in loan volume and a need to “right-size the business and create more efficiencies,” as well as the development of new technology by the company in an effort to streamline its processes, which “dramatically reduced the people and time needed to fund a loan.”

“While these actions were difficult, they were necessary to continue to provide a best-in-class experience to consumers in the new rate environment,” Ciardelli said.

Guaranteed Rate, whose name has adorned the home of the Chicago White Sox since 2016, is the country’s second largest retail mortgage lending company, according to Inside Mortgage Finance, a subscription-based industry news and data provider. As a retail mortgage lender, Guaranteed Rate works directly with consumers, while other mortgage lenders work through intermediaries such as real estate brokers. Some lenders use both models.

Inside Mortgage Finance finds business is down nearly 60% for Guaranteed Rate in the first three months of this year compared with 2022, with other mortgage companies seeing similar harsh declines.

Guaranteed Rate did not make Ciardelli available for an interview, nor did the company answer questions regarding how many positions have been eliminated, the processes surrounding the layoffs or the state of morale at the company.

Andrew Pohlmann, chief marketing officer, said in an email, “Unfortunately, we are unable to comment on the process of our reductions or how we communicated to employees.”

[ Spring housing market ‘stalling’ as record low inventory plagues buyers ]

Pohlmann declined to say how many people work at the company. Different parts of the company’s website cite the total number of employees ranging from more than 9,000 to more than 15,000. Current and former employees told the Tribune in recent days this number is down well below 10,000.

Palmiotto, 57, said layoffs likely numbered in the thousands, with the company having around 8,000-9,000 employees prior to the layoffs in 2022. Furloughs also took place last year, Palmiotto and other employees said.

“We tried to maintain staff as much as we could, hoping that business would bounce back or that conditions would change,” Palmiotto said. “They didn’t really improve.”

Real estate industry news outlet HousingWire first reported on August layoffs at the company last week.

There have been no Worker Adjustment and Retraining Notification layoffs — the type of job cuts that require notifying the state when mass layoffs are issued or a plant is shuttered — at Guaranteed Rate from 2021 until now, according to the Illinois Department of Commerce and Economic Opportunity.

After six years with Guaranteed Rate, Palmiotto now works at The Money Store, a subsidiary of MLD Mortgage, based in New Jersey. He said he switched jobs because “I felt going to a smaller organization, I would have more influence and more of an ability to be more involved in strategic direction and decisions.”

Palmiotto said he was one of around 10 people who reported to Ciardelli.

Khadijah Parks, 27, worked for Guaranteed Rate as a remote employee based out of New Jersey before she was laid off from a technology team in October 2022. She was brought on during the hiring boom to be on a new team that helped support other mortgage companies Guaranteed Rate was acquiring and creating. Now, she said, her team and other tech teams have been decimated.

Parks worked for the company for about 11 months and was laid off right before her severance package would have increased significantly if she had made the one-year mark, she said.

“It was terrible,” Parks said, who had come back from vacation the day of her layoff. “They had the nerve to even say I could feel free to finish up the work I was doing.”

Parks remains unemployed.

[ Illinois saw cooler spring housing market as inventory remained tight and mortgage rates high ]

Current and former employees including Parks said that there was a lack of communication from upper management about layoffs.

Palmiotto said he doesn’t know why messaging wasn’t better, but there were conversations around it. He also said he wasn’t privy to what morale was like given that he was a remote employee not based in Chicago.

“I feel like everybody handled it the best they could,” Palmiotto said, adding that he didn’t think the layoffs could have been prevented and that layoffs were not unique to Guaranteed Rate.

Other mortgage companies including Rocket Mortgage and Better.com have also faced layoffs and buyouts because of the slowdown in the housing market.

Mindy Marchetti, 47, was a manager on a technology team like Parks’ for Guaranteed Rate. She started in August 2021 as a remote employee and voluntarily left the company in March of this year after she witnessed the layoffs.

“When I was hired, we were in a mortgage boom, so things were amazing. We had all kinds of resources, and company morale was excellent …” Marchetti said. “As the rates started to increase, layoffs came. And I am a single mom, and I had to make sure that I had some career stability, so that is why I chose to look elsewhere.”

Marchetti said Ciardelli and Nik Athanasiou, COO of Guaranteed Rate, mentioned the need for layoffs due to the market downturn at some weekly calls with team managers and loan officers.

By the time she left, Marchetti said there were layoffs every two weeks, resources were waning on her team, morale was “very low” and there was a feeling of “instability.”

“It just felt like your number could be called next,” Marchetti said.

Correction: An earlier version of this story included an inaccurate list of mortgage lenders that have conducted layoffs and buyouts. The story has been corrected.

ekane@chicagotribune.com