Mortgage fintech Tomo cuts nearly a third of its workforce

Lending fintech Tomo Networks cut nearly a third of its workforce Tuesday and will dial back its expansion plans, the company confirmed Wednesday.

The Stamford, Connecticut-based firm laid off 44 employees ahead of a bumpy economic cycle, it said in a statement. It’s the latest mortgage fintech to undertake layoffs and the most recent lender to cite rising interest rates and reduced volume for downsizing.

“While we explicitly don’t offer refinance mortgages because of the risky boom and bust cycle, we’ve still been impacted by the rapid rise in interest rates that has reduced purchase mortgage margins,” said CEO and co-founder Greg Schwartz in a LinkedIn post Tuesday. “Venture capital is also pulling back in this chaotic economic environment, and thus, we must map out a stable budget that will rely on less capital for longer.”

The lender now has 110 employees and doesn’t plan more layoffs, it said. Tomo just raised $40 million in a Series A funding round in March and recently touted a valuation of $640 million. 

Former Zillow executives Carey Armstrong and Schwartz founded Tomo in 2020 and raised $70 million in seed funding last June. The company also immediately pledged to forgo refinances during their recent spike in popularity. Tomo claims to close 98% of its loans on time and serves nine states. It also added jumbo loans in January, a popular product amid rising rates and home values.

The company joins the growing list of mortgage firms small and large that have undertaken job cuts since the beginning of the year. Digital lender Better.com and mortgage technology firm Blend have laid off workers in the past two months while massive players Rocket Cos. and Wells Fargo also have let mortgage employees go.