Flagstar Bank lays off 700, with 1,200 more to depart after asset sale to Mr. Cooper

New York Community Bancorp (NYCB) this week announced that it rebranded to Flagstar Bank, laid off 700 employees and anticipated the transition of another 1,200 to Mr. Cooper Group as part of the sale of its third-party origination (TPO) business and mortgage servicing rights (MSRs).

The changes come after NYCB, which concluded a merger with Flagstar in December 2022 and acquired some of Signature Bank‘s assets in March 2023, faced a confidence crisis related to its commercial real estate portfolio. The financial institution received a $1 billion equity investment and sold $5 billion in warehouse mortgages to JPMorgan Chase Bank. 

NYCB said in a statement that the workforce reduction, which affects 8% of its employees, is part of its strategic plan to integrate its three legacy banks. In many cases, roles were similar or duplicative.

Chairman, president and CEO Joseph Otting, a former Comptroller of the Currency, added that the layoffs are part of a commitment to a “profitable future” and a “more agile, competitive company.” 

“This includes strengthening our management and board, redefining our operational plan for improved efficiency, and enhancing our credit oversight and risk framework,” Otting said. 

HousingWire anticipated that more than 1,000 NYCB employees would be impacted by the asset sale to Mr. Cooper Group.

As part of the deal, the Dallas-based Mr. Cooper is expected to pay $1.4 billion in cash for the TPO platform and $356 billion in MSRs, advances and subservicing contracts. The transaction is expected to close in the fourth quarter.

NYCB common stock will trade under the ticker symbol “FLG” effective Oct. 28. On Friday morning, its stock was trading at roughly $12.10, down 2.22%.