Compass trims tech staff as more firms cut costs

Three real estate and mortgage players are reining in payrolls and operations as the industry reckons with on-going muted production volume and 14-year high interest rates.

Compass will lay off 271 workers from its Seattle office in mid-November, it said in a Worker Adjustment and Retraining Notification filed Wednesday with Washington's Employment Security Department. The disclosure comes a day after the brokerage, in a Securities and Exchange Commission posting, revealed it would shrink its product and engineering team.

"The company believes it is in a position to reduce its go forward investment in technology given the maturity of the company's technology platform," read the disclosure, signed by Brad Serwin, general counsel and corporate secretary.

It's unclear if the Seattle employees are the extent of the layoffs, and a Compass representative didn't respond to a request for comment Thursday. The brokerage will incur pre-tax cash charges of $23 million to $26 million for severance and other termination benefits for employees laid off during the third quarter, according to Tuesday's filing. 

The move is separate from its June layoff of 450 employees, which the firm also said would cost $21.5 million to $23 million in expenses. 

Compass reported a net loss of $101.1 million in the second quarter. In that same earnings report, Compass CEO Robert Reffkin touted the firm's $900 million investment in software to benefit its agents. He also announced a cost reduction program looking to make the brokerage cash flow positive next year. Tuesday's SEC filing indicated the company's operating expense level in 2023 is expected to be between $1.05 billion to $1.15 billion.

Ruoff Mortgage this month also laid off 4.6% of its workforce, according to reports. The Fort Wayne, Indiana-based lender cut at least 43 local employees, according to Mark Music, president and CEO, in an interview with Greater Fort Wayne Business Weekly. He attributed the layoffs to the Federal Reserve's interest rate hikes and mortgage rates, which reached 6.29% this week, according to Freddie Mac. 

The lender counts over 70 retail locations and operates in 45 states, and originated $5.445 billion in 2021, it said in June.

BayFirst Financial Corp. is also reining in its mortgage operations, announcing Thursday plans to shut down its nationwide network of loan production offices. The St. Petersburg, Florida-based depository cited declining mortgage volumes and said it would continue to originate residential loans in its home state's markets. 

The company counts 23 mortgage offices in 12 states including six in Florida, according to its website. It's unclear if any workers will be laid off or reassigned, and an executive didn't return a request for comment Thursday. BayFirst in the second quarter also spent $630K to discontinue its direct-to-consumer channel, it said last month.

BayFirst's Residential Mortgage Division originated $305.6 million in loans during the second quarter, it reported. The production was an 8.9% drop from $335.6 million in originations in the first quarter, and a 48.2% decline from $522.1 million in originations in the second quarter of 2021.