It may be a long road ahead before things get better for Better.com.
In the months since the online mortgage company captured headlines for its notorious wave of December layoffs over a Zoom call, Better has continued to shed members of its workforce with recent departures coming out of the company’s executive team.
“After nearly three years as VP finance at Better, I have decided to leave and seek new opportunities,” said Clayton Carol in a Feb. 16 social media post announcing his resignation from the company.
Carol is the latest in a growing list of company executives who exited Better in the past two weeks, including Sarah Pierce, Better’s executive vice president of customer experience, sales and operations, and Emanuel Santa-Donato, vice president of capital markets and growth.
According to their social media accounts, both individuals bid farewell to the company after six years. Neither Pierce nor Santa-Donato immediately responded to RISMedia requests for comments.
Better was also dealt another blow earlier this week when Christian Wallace, head of the company’s new real estate division, reportedly gave her three-week notice to the company as well.
Despite the ongoing departures by top executives, Better has also secured a recruit for its C-suite.
The company hired Sushil Sharma as its new chief growth officer, according to a recent email to employees from Better founder and CEO, Vishal Garg, and obtained by RISMedia.
Sharma, who will start his new job on Feb. 22, was the chief product and revenue officer for Pray.com. Before that, he was the chief product officer at LendingTree.
“Sushil’s extensive background in world-class performance marketing, user experience and engineering … will be a great benefit to Better as we continue on our path to going public,” Garg wrote in the Feb. 16 email. “As our new CGO, Sushil will be responsible for strategic leadership of Better’s marketing analytics, CRM, growth and acquisitions teams.”
While the new hire is a positive sign for the company, Better still has some hurdles it needs to overcome, according to a recent document the company filed with the U.S. Securities and Exchange Commission.
In the document, Better estimated on a preliminary basis that its 2021 Q4 revenue dropped between 17% to 22% sequentially versus the previous quarter. The company also forecasted an annual revenue decline of up to 29% compared to 2020.
Better reported a net loss of $111.1 million for the nine months ending on Sept. 30, 2021, and estimates an annual net loss between $167 million and $182 million based on a preliminary unaudited forecast in the filing.
The shrinking market for refis is primarily to blame for that, given that it is a large portion of Better’s business model.
“Our ability to grow that portion of our business is heavily dependent on the attractive interest rates we offer relative to market interest rates and customers’ current interest rates,” Better stated in the document.
U.S. single-family mortgage originations are expected to decrease dramatically in 2022, falling from the sugar highs of 2020 and 2021 by $1 trillion. The Mortgage Bankers Association forecasts that refinance originations will come in at $870 billion in 2022, down from $2.32 trillion and $2.63 trillion in 2021 and 2020, respectively.
The company also admitted that “company culture” issues have contributed to its performance and financial decline.
In December 2021, Garg made headlines after laying off 900 employees—or 9% of his company’s workforce—over a now-viral Zoom call. He cited the market, performance and productivity as reasons behind his decision.
While Garg issued an apology on Dec. 7 for handling the layoffs announcement the way he did, the damage was already done. The company faced a barrage of negative press and scrutiny over the incident, leading Garg to leave nearly a month later.
He has since returned to the company.
According to multiple media reports, three of Better’s top communications executives resigned amid the initial wave of backlash following the Zoom call.
Two of its board members, Raj Date and Dinesh Chopra, jumped ship not long after that as well. However, New York Post reports indicated that the company said the departure was not “because of any disagreement with Better.”
Better did not respond to RISMedia inquiries for this article.
However, the company’s SEC filing indicated that Garg’s move “has affected Better’s management and leadership, has detrimentally affected Better’s productivity and financial results and has disrupted certain third-party relationships.”
The company noted that it hired a third-party company to conduct a cultural assessment following the incident, which “identified a number of areas of its workplace culture that require improvement,” including the December layoff incident.
The company has set out to address those company culture challenges.
“Any failure to effectively manage our culture, workforce and related organizational changes could potentially have longer-term impacts on our reputation among our current and potential team members, customers, commercial partners, lenders and investors, which could materially and adversely impact our internal controls, future growth and achievement of our business objectives,” the Better documented stated.
Better’s production may also be tied to persisting strain in the greater lending industry as refinancing business shrinks, according to Paul Hindman, managing director at Grid Origination Services.
Hindman has said in previous interviews with RISMedia that the decline in refis will likely drive mortgage companies—specifically those that relied heavily on refi activity—to cut more staff as rates rise in 2022 if they haven’t diversified their product offering.
“Everyone else that pivoted on those products earlier is ahead of the game,” Hindman says. “At the end of the day, if you’re last to change your strategy, you can’t really capture market share without taking a loss on business.”
Despite Better’s challenges, Hindman still thinks there is a chance to rebound. However, it won’t be easy.
“Given the abrupt and consequential decline in mortgage refinancing, the right lead gen partner can absolutely reseed Better’s product array to plant and grow what many are hoping will reap a profitable IPO harvest,” Hindman says.
This is a developing story.
Jordan Grice is RISMedia’s associate online editor. Email him with your real estate news ideas to jgrice@rismedia.com.
