Estimated read time: 4-5 minutes
ATLANTA — Christian Chapman, a former underwriter at Better.com, thought he was logging onto another of CEO Vishal Garg's town halls.
He didn't know it would be his last call as an employee of the online mortgage company.
"If you're on this call, you are part of the unlucky group that is being laid off," Garg said on a one-way webinar last Wednesday, which lasted three minutes. Garg started immediately and did not wait for workers to trickle into the meeting. "Your employment here is terminated effective immediately."
The call ended abruptly, leaving the underwriter dumbfounded. Chapman, who is the sole provider for his family of seven, was used to outbursts from his boss, but this was unexpected.
Chapman began messaging in company Slack channels asking what was going on when his screens went black — he lost access to his company computer, phone, email and messaging. He resorted to Facebook Messenger to reach out to colleagues.
Garg had promised a follow-up email from human relations, but employees' access was terminated. Chapman ultimately received the communication via his personal email hours later.
"It was a surreal moment. It was one of those things that you don't believe it's going to happen," Chapman said.
The company laid off 900 employees in those few minutes, or about 9% of its staff. Better.com is valued at $6.9 billion — earning it the so-called unicorn status. The company ranked #1 on LinkedIn's Top Startups of 2021 and 2020. Better.com hasn't responded to a request for comment.
The Softbank-backed mortgage lender announced in May it was going public through a special purpose acquisition company, or SPAC. The day before the lay offs, the firm announced it received $750 million in cash as part of an amended deal with investors, according to TechCrunch. That would mean Better has $1 billion in cash.
But tons of cash in a company doesn't offset how the wider mortgage market is doing.
Garg later accused the fired employees of "stealing" from their colleagues and customers by being unproductive and only working two hours a day, according to Fortune, which confirmed those sentiments in an interview with the CEO.
Several former employees interviewed by CNN Business said the staff was blown away by the CEO's remarks and sudden firing. But Garg has been involved in controversy before, as evidenced by an email he sent to staff that was obtained by Forbes in 2020: "You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS ... SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME," he wrote.
"I got promoted, and then he's out there trying to portray everyone as lazy and stealing money," said another former employee who asked not to be identified, and who recently won an award for his performance at the company. "That is messed up. I'd rather be broke than have whatever is going on in his head."
Chaotic work culture
Chapman, who has worked in the mortgage business for almost 20 years, also said he had recently completed a positive performance review call with his manager.
Employees described a chaotic work culture at Better.com, one with many benefits but also a CEO who regularly dropped "F-bombs" in company-wide virtual meetings.
"I realized after my first meeting that I needed to keep it on mute and keep my earphones in, because I've got five kids and I didn't want them hearing that kind of language," Chapman said.
Chapman said he has now been through four layoffs at various mortgage companies, but none as "obtuse and dispassionate" as this.
"I am looking for the bright side but there's the reality of the situation," Chapman said. "Things aren't going to be what they were and it's going to require some massive action on my part."
What went wrong?
The mortgage industry has been fueled by refinancings, which skyrocketed during the pandemic as mortgage rates dropped to historic lows. But with mortgage rates rising and expected to go higher, that boom is slowing down.
After falling steadily during the first year of the pandemic, mortgage rates reached a record low at the beginning of 2021, with 30-year mortgages available for as little as at 2.65%. But rates are on the rise now.
The Mortgage Bankers Association expects the 30-year, fixed-rate mortgage to end 2021 at 3.1% and climb to 4.0% by the end of 2022.