The "strategic decision" will pair Oceanfirst with Embrace Home Loans, a deal that is set to begin in the fourth quarter this year, bank officials said. 

"The partnership with Embrace will ensure that residential loan financing options remain available to the bank's customers and communities we serve," said Oceanfirst's director of corporate communications and marketing Jill Apito Hewitt in a statement sent to National Mortgage News. 

The news, which was first reported by NJBiz, comes after the bank filed a worker adjustment and retraining notification notice with New Jersey regulators, advising of the termination of 114 positions, effective Dec. 18. 

The layoffs will most affect employees in the residential mortgage unit of Oceanfirst, "who will receive commensurate severance and career transition assistance," Hewitt added. The bank's departure from mortgage will end its involvement in home lending that goes back more than 120 years.   

The pullback also comes a little more than a year after Oceanfirst acquired fellow New Jersey lender Garden State Home Loans, adding 42 new staff members at the time. In the deal, Garden State kept its branding as a separate division of Oceanfirst. 

The mortgage industry's hopes of originations growth over the past two years has yet to materialize to the degree many anticipated, though, leading to further downsizing for many companies after a wave of layoffs and consolidation early this decade. 

The decision also comes almost exactly one year after Oceanfirst settled redlining allegations with the federal government, agreeing to invest over $15 million to serve minority communities. Since the enforcement action, federal examiners and local community groups have both praised Oceanfirst for its ongoing outreach efforts in minority neighborhoods.

What the deal brings for each lender

Based in Middletown, Rhode Island, Embrace Home Loans is currently licensed in 45 states and offers a range of conventional and government-backed financing, along with non-qualified mortgages. The company employs 350 people, and in 2024, managed to pull in approximately $2.4 billion in production.  

The two companies share a linked connection in Stephen Adamo, Oceanfirst's current president of residential and consumer lending, who joined the bank in 2023. His appointment to the position came after an executive leadership tenure at Embrace, where he led national retail production. 

"Embrace has a history of supporting mortgage operations for regional banks and financial institutions," the nonbank said in a statement. "We plan to partner with Oceanfirst to connect with their clients in the bank branch network and online." 

Shifts in the industry landscape are also forcing lenders of all types to adjust strategies to lean into parts of their businesses offering maximum potential for growth, Hewitt also added. She noted Oceanfirst would up investment in its commercial banking unit as it closes mortgage operations.   

"Residential lending has become dominated in recent years by large-scale wholesale mortgage companies and financial technology firms, prompting many banks to re-evaluate their mortgage business models," she said. 

With minimal downward movements in mortgage rates this year failing to bring in a surge of home buyers, hoped-for originations growth also lagged, unable to sustain momentum. Oceanfirst executives alluded to the trend as an ongoing headwind in its most recent earnings call in July.

"Turning to our residential business, activities increased on the linked quarter basis. But our markets continue to remain impacted by uneven loan demand, volatility in rates and limited inventory," said president and chief operating officer Joseph Lebel at the time.

While a still-soft lending environment in the near term helped lead to several notable mergers this year of some of the largest mortgage industry players, regional and community banks have also turned up in 2025 deals, both as purchasers and sellers of assets. Among this year's buyers is Oklahoma-based Bank7, which acquired a regional nonbank lender in March.