AURORA, Colo. — American Financing, a mortgage banker based in Aurora, is laying off more than two-thirds of its workforce, according to a letter submitted under Colorado's WARN Act.
The company announced Wednesday that 194 of its 305 employees would have to find a new job due to "unforeseeable business circumstances." The company says it did not expect the "speed or extent" its sales would decline in the past month and a half.
The layoffs are happening in two waves, with the first starting Friday and the second starting two days before Christmas.
Dr. Alex Padilla, an economics professor at MSU Denver, says the company's decision to cut costs isn't surprising.
"Companies that are driven — or their business, their industry, their sector — is actually to supply mortgage and loans are going to have to layoff people because they predict that we are going to enter a recession very soon," he said Thursday.
The Federal Reserve's attempt to control inflation by increasing interest rates has made its mark on the mortgage industry, with would-be homebuyers less likely to take out a loan with more interest.
"Businesses are still trying to maximize profit or minimize their losses [during] an economic downturn, so [they] are more likely going to wait and see what's happening," Padilla said.
He warns it's possible other mortgage lending companies could be laying off workers, too, as talks of a recession continue, but not one industry is immune to economic uncertainty.
"Anyone that works in that industry might want to get out of the industry, because, you know, we may not have the patience, or the finance, to go through a downturn," Padilla said.
Denver7 reached out to American Financing for comment on this story but has not received a response.
Several laid-off employees Denver7 contacted said they couldn't speak with the media because of a clause in their severance package.
American Financing is a sponsor of Denver7's Everyday Hero Award.