Doma is dropping another large group of employees as the title insurer looks to navigate the shifting residential real estate market.
The digital title insurance provider is laying off 250 employees, Inman reported. The cut comes only three months after the company executed an even larger round of layoffs, shedding 310 employees in May.
All told, the company expects the layoff of 561 employees will lead to an annual cost savings of $70 million.
“In rare times like these, it’s important to separate the cyclical from the structural,” Doma CEO Max Simkoff said in an August 9 earnings call.
The company has been posting increasingly dire losses on a quarterly basis since the onset of the pandemic. While Doma’s net loss in the third quarter of 2020 was $3.6 million, the company has posted losses of $50 million, then $58.7 million in the last two quarters, respectively.
That’s probably not what Simkoff had hoped when his company, formerly known as States Title, merged with a blank-check firm backed by Capitol Investment Corp. to go public last year. Things turned sour for Doma almost immediately after its deal with the special purpose acquisition company deal, as it raised less than anticipated after needing to pay out $295 million to early investors who redeemed shares before the stock plunged, according to Inman.
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The company was founded in 2016 with the goal of using machine learning to automate 70 percent of the manual labor needed for the archaic title insurance process. Mortgage refinancings, however, have grown increasingly undesirable to homeowners in recent months as rates have soared above the levels they hovered around at the start of the pandemic. As of earlier this month, demand for mortgages has been mired at its lowest level this century.
The company is planning to put more emphasis on purchase mortgages. Simkoff said executives believe the company will post positive adjusted earnings by the end of next year, at the latest.
Doma is far from alone in struggling to keep its workforce together as the tide turns on the mortgage market. The industry has been beset by numerous layoffs in recent months and some mortgage companies that have shuttered altogether.
Blend Labs recently cut 220 jobs shortly after eliminating 200 jobs, shedding approximately 25 percent of its workforce this year. Other companies to significantly reduce their mortgage arms include JPMorgan Chase, Wells Fargo, Mr. Cooper, Tomo, Homelight, Keller Williams, Movement Mortgage and Better.com.
— Holden Walter-Warner