This news comes just weeks after the company received a $15 million capital injection from its parent company, WMC Financial.
The financial services firm declared that its move is part of a strategy to scale down and focus on core activities such as real estate securities processing and residential mortgage securities. It cited competitive market conditions, regulatory changes, and cost pressures as the reasons behind the restructuring.
As part of this restructuring, the majority of the existing workforce will be laid off, with only a few senior executives staying on board. WMC Mortgage also announced the closure of its offices, though the exact number of locations is yet to be determined. The company mentioned that those who remain employed would move to the headquarters in California.
The news came as a shock to many employees, who had no prior warning of the impending layoffs and office closures. The news was particularly surprising for the affected employees, since just weeks earlier, WMC Financial had provided a capital injection into WMC Mortgage.
The news of this restructuring has sent shockwaves throughout the mortgage industry, as it came at a time when the mortgage market is beginning to show some signs of recovery. It appears that the company is now taking a more cautious approach in light of the current market conditions, as well as the new regulations imposed by the Consumer Financial Protection Bureau (CFPB).
This shift in focus to more core activities could be a smart move for WMC Mortgage, as it may help the company cut costs and streamline its operations, enabling it to become more competitive. However, it remains to be seen whether this strategy will be successful in the long run, as the mortgage industry is still in a state of flux due to the recent regulatory changes.
The news of WMC Mortgage's restructuring has caused some uncertainty within the mortgage industry. While the move may help the company gain competitive advantage and save costs in the short-term, only time will tell if it will result in long-term success. Furthermore, the layoffs and office closures may affect the market in general, as it reduces the number of mortgage providers available to customers.
Overall, the decision by WMC Mortgage to restructure and focus on core activities is a risky move, especially in the midst of the current regulatory environment. Despite the potential upsides of the move, it remains to be seen whether the company will be able to successfully transition and emerge as a leader in the competitive mortgage market.
This article was contributed on Nov 16, 2023