Just a year after acquiring Stearns Lending’s wholesale mortgage division, Guaranteed Rate is shutting it down and laying off 348 employees, according to a Worker Adjustment and Retraining Notification (WARN) Act notice filed on Jan. 12 with the Texas Workforce Commission.

Guaranteed Rate filed a separate WARN Act notice on Jan. 6 saying it was shutting down an operational unit that supports Stearns’ partner SoFi and laying off 93 employees.

Guaranteed Rate CEO Victor Ciardelli emailed mortgage brokers nationwide on Jan. 13 to warn them of the impending closure of Stearns Wholesale. According to excerpts of the email published by industry commentator Rob Chrisman, Ciardelli wrote:

“As you are aware, Guaranteed Rate acquired Stearns Wholesale in the early part of 2021 with the ultimate goal of becoming the nation’s #1 lender. To ensure our success means we must sometimes make hard decisions. A strategic review has brought us to the decision to discontinue our third-party wholesale channel, Stearns Wholesale Lending.”

A spokesperson for Guaranteed Rate confirmed that the email from Ciardelli was quoted accurately but provided no further comment. SoFi did not immediately respond to Inman’s request for comment.

When Guaranteed Rate announced last year that it was acquiring Stearns Lending’s parent company, Stearns Holdings LLC, the company operated in all 50 states through retail, joint venture, partnership and wholesale channels.

At the time, Guaranteed Rate said it was acquiring Stearns — a national top 25 lender with more than $20 billion in 2020 origination volume — to bolster Guaranteed Rate’s retail loan origination, scale its joint venture platform and develop “new multichannel capabilities.”

The plan was to integrate and rebrand Stearns’ retail operation as Guaranteed Rate, while maintaining Stearns’ wholesale and partnership businesses as stand-alone operations, with Stearns CEO David Schneider in charge.

According to Guaranteed Rate’s Jan. 12 WARN Act notice to the Texas Workforce Commission and Lewisville, Texas, Mayor TJ Gilmore, “the entire Stearns Lending wholesale division” will be closing down, with affected employees to be separated on March 13.

The affected employees work at or report remotely to Stearns Lending’s corporate headquarters in Lewisville, the notice said.

On Jan. 6, Guaranteed Rate filed a separate WARN Act notice disclosing that the operational unit of Stearns Lending that supports SoFi operations was closing in January. The first 66 of 93 affected employees were to be laid off on Jan. 6, with the remainder staying on through the end of the month.

SoFi, which in addition to mortgages also offers student loans and personal loans, did not immediately respond to a request for comment on how it would accommodate the shutdown of the Stearns Lending unit that supports it.

Mortgage wholesalers fund loans originated by independent mortgage brokers. Since they don’t market themselves to consumers, they’re not well known to the public as retail lenders such as Rocket Mortgage and Wells Fargo.

But as rising mortgage rates take their toll on the refinancing boom, wholesalers say they’re in a good position to compete for business from homebuyers, thanks to mortgage brokers’ ties to real estate agents.

During the three months ending Sept. 30, the nation’s biggest wholesale lender, UWM, funded a record $26.5 billion in purchase loans taken out by homebuyers who were sent to the company by mortgage brokers.

Better Mortgage laid off 9 percent of its workforce in December, or about 900 employees in the U.S. and India, saying it would better position the company for growth as lenders shift their focus from refinancing mortgages to providing purchase loans. Better CEO Vishal Garg took a brief leave of absence after a video of him firing the employees on a Zoom call went viral.

Guaranteed Rate is better known to many real estate agents for its joint ventures with franchising giant Realogy Holdings Corp. (Guaranteed Rate Affinity LLC) and national brokerage firms @properties (Proper Rate LLC) and Compass (OriginPoint).

Stearns Lending founder Glenn Stearns left the company in 2019 and launched Kind Lending in 2020. Last summer Kind Lending launched a joint mortgage venture with eXp World Holdings, SUCCESS Lending.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

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