California-based PennyMac Financial Services will invest $3.9 million to open a new mortgage origination center in Franklin, Tennessee. The nonbank mortgage lender is expanding its consumer direct lending business while some competitors are laying off employees with the expectation that the channel cools down with higher mortgage rates.
PennyMac’s new project will create 325 jobs in Williamson County, but employees will acquire and interact with customers across the country through a headset. The company said it has 2 million customers and over 7,000 employees in 16 locations.
Doug Jones, president and chief mortgage banking officer at PennyMac, said in a statement the new facility will boost PennyMac’s operations coast-to-coast “while supporting the organization’s overall growth initiatives.”
PennyMac is growing fast with its consumer direct lending business. The company produced $11.1 billion in loans in the channel in the third quarter of 2021, up 76% compared to the same period of 2020.
In a press release announcing the third-quarter earnings, the company said the increase in earnings “was driven by strong execution in our consumer direct lending channel in particular, which locked and funded record volumes.” The consumer direct channel contributed to $446.7 million in revenues in the third quarter 2021, 80% of the total.
However, the lender’s consumer direct market share was only 1.4% from January to September 2021, compared to 0.7% at the end of 2019.
The consumer direct lending business has the lowest market share for the company compared to other channels, such as correspondent (17.7%) and broker (2.4%). Regarding the broker division, the company announced it has rebranded from PennyMac Broker Direct to Pennymac TPO and launched a new technology platform “to help brokers reach their business goals and aspirations.”
In recent months, lenders with consumer direct models with heavier refi businesses have announced loan officer layoffs. Earlier this month, Wyndham Capital Mortgage, headquartered in Charlotte, North Carolina, said it laid off 35 LOs across Dallas, Charlotte, Salt Lake City, Kansas City, and Phoenix.
Digital mortgage lender Better.com laid off 9% of its workforce ahead of a $750 million cash injection from financial backer SoftBank Group. Meanwhile, Chicago-based Interfirst Mortgage Co. laid off 77 employees in its Charlotte, North Carolina office and 274 in its Chicago-area location.
According to analysts, these lenders tend to be refi-heavy and rely on call centers for intake, struggling to find footing in a purchase market as rates climb and margins start to compress.