Texas-based USAA Bank has laid off more than 90 employees from their mortgage department. The need for laying off employees have dwindled due to decrease in demand of real estate loans.
Diminishing demand of mortgage loans
US inflation hit a 40 year high in January due to significant increase in consumer price index. Moreover, the increase in inflation forced the Federal Reserve to increase the interest rate by 0.5%. Inflation in January rose by 7.5% as compared to last year. The increase in interest rate led to a diminishing demand of mortgage loans. Customers became more reluctant to invest in real estate through bank loans. Therefore, USAA projects a 34% drop in real estate loans. According to the projections, the bank will be able to book 025,000 loans only. Although, they have the staff to facilitate more than 38,000 loans.
The San Antonio Express News reported the company had reduced its mortgage sales team by more than 90 employees. The newspaper was able to obtain internal emails as basis of their reports. The company confirmed the cuts. However, they categorized the lay-offs as business as usual for the company having a workforce of 16,800 employees. “USAA continually adjusts staffing based on ever-changing market conditions and to meet the demands of our membership. We have a dedicated team ready to support impacted employees with a range of benefits, which may include finding other roles in areas of our business where we’re hiring, and other transitional benefits.” USAA Bank spokesman Roger Wildermuth told confirmed in a prepared statement.
WARN Notification Act requirement
It’s unclear if the San Antonio-based company has notified the Texas Workforce Commission of the cuts. However, they are bound to notify the commission as per the requirement of Worker Adjustment and Retraining (WARN) Notification Act. The labor law is designed to protect employees by providing them a 60-day notice of mass furloughs. A few months earlier another Texas-based firm Stearns Lending LLC, revealed plans to lay off 348 employees. This was in accordance to a move prompted by the closure of its wholesale channel after its acquisition.
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