Nonbank mortgage lender and servicer Pennymac Financial Services scrapped its plans to hire more than 300 staff in North Carolina due to prolonged periods of elevated interest rates.
In 2021, Pennymac vowed to create 322 jobs in Wake County, North Carolina and invest $4.3 million into Pennymac Loan Services, its mortgage lending subsidiary, to establish a mortgage fulfillment production center in Cary, North Carolina.
“Currently, however, mortgage rates have climbed to a 20-year-high, which impacts housing, hiring and further expansion efforts. Due to the cyclical nature of the mortgage industry, we were hopeful that the duration of elevated interest rates would not be long lasting,” Janis Allen, executive vice president of corporate real estate at Pennymac, wrote in a Dec. 19 letter to the North Carolina Economic Investment Committee and the North Carolina Department of Commerce.
“Unfortunately, we do not see this change taking place within the base period or extended base period of the Community Economic Development Agreement (CEDA),” Allen noted.
Pennymac’s expansion was set to be facilitated in part by a Job Development Investment Grant (JDIG) approved by North Carolina’s Economic Investment Committee in 2021.
The JDIG agreement authorized the potential reimbursement to Pennymac of up to $1.9 million over the course of 12 years. Over the 12-year term of the grant, the project was projected to grow North Carolina’s economy by more than $813 million.
The current project location is still operational and occupied by key information technology teams and senior leaders.
Since Pennymac opened doors in Cary, North Carolina three years ago, a total of 68 full time employees worked at the facility as of December.
Pennymac invested more than $1.5 million in tenant improvements in North Carolina since 2021, the letter added.
Pennymac referred to the letter sent to the North Carolina Economic Investment Committee and declined to comment.
As with many other lenders across the country, Pennymac has been feeling the full brunt of elevated interest rates.
The lender’s U.S. workforce declined to only “over 4,000” at the end of fiscal year 2022 from 6,900 employees, according to its annual report filings with the Securities and Exchange Commission (SEC).
Most recently, Pennymac issued pink slips to more than 80 employees in November in its California offices impacting loan officers, senior app developers and vice presidents of app development, talent sourcing and sales manager.
In Q3, the California-based lender delivered a $92.87 million net income, up from the second quarter’s $58.2 million but down from $135 million in Q3 2022. Pennymac’s servicing earnings propped up its latest third-quarter performance.
On the strength of its correspondent mortgage business, Pennymac ranked as the second-largest mortgage lender in the first nine months of 2023, trailing just United Wholesale Mortgage (UWM), according to data from Inside Mortgage Finance.