Blend is cutting 10% of its workforce

Mortgage technology firm Blend said it will eliminate approximately 200 positions, or around 10% of its workforce, in response to higher rates and reduced refinance activity impacting volume.

The San Francisco-based company announced the cuts Monday in both a blog post and a Securities and Exchange Commission filing, two weeks after reporting heavy losses in Q4 2021. Blend’s refinance volume is likely to be down 60% to 70% this year, and the company’s title insurance agency has been especially impacted by the decline, executives said.

“These are not performance-based determinations. These are really talented, capable people,” said Tim Mayopoulos, Blend president, in an interview with National Mortgage News.

“We’re not quite as dependent on people expenses as the typical mortgage lender,” he added. “But we do have some operationally intensive businesses such as our title insurance agency, and as a result, when refinance volume in particular is likely to be down 60% to 70%, this year, we just we just don’t need as many people to process a much smaller number of transactions.”

The cuts will cost Blend approximately $6.7 million in expenses including benefits, severance and stock-based compensation while saving the firm approximately $35.4 million in annual compensation costs, according to the SEC filing. Blend in its recent earnings report said it lost $171.3 million in 2021 and recorded a net loss of $71.7 million in Q421 alone.

Blend has no plans for additional cuts, Mayopoulos said, and the company informed its affected employees, largely working remotely, via Zoom or phone call. The company made “modest” adjustments to its product and engineering teams and most of the cuts came in title operations and general and administrative roles, he said.

Affected employees are eligible to receive at least 18 weeks of pay, continued health insurance into June and 12 weeks of career transition services, Blend founder and Head Nima Ghamsari wrote in the blog post.

The firm launched its initial public offering and closed on its purchase of Title365 last summer. Mayopoulos emphasized Blend’s push into consumer banking, which will diversify the company’s revenue streams, and said the firm’s push to digitize the title business remains steadfast. He also cited Blend’s growth in the market share of lenders using the firm’s software, from 10% of mortgage loans executed with Blend in 2020, to 15% of market share in 2021 and an expected 20% this year.

“A 20% market share in a market that’s as fragmented as the U.S. mortgage market is quite good,” Mayopoulos said. “And I think it shows you our confidence in our ability to grow our presence in this market, notwithstanding the decline in transaction volume.”

Blend’s announcement is another public downsizing in the industry which is reacting to rising rates, soaring home prices and mortgage activity trending down. Digital mortgage lender Better.com this week also disclosed a “significant” cut to its workforce in response to declining volume.