Published October 24, 2013
Bank of America Corp is looking to cut 3,000 mortgage jobs before the end of the year to cope with declines in refinancing and in its portfolio of delinquent home loans, according to the Wall Street Journal.
About 1,200 mortgage employees received notice that their position would be eliminated on Thursday, the newspaper said, citing people familiar with the matter. A majority of the 3,000 cuts will come from temporary contractors, though full-time employees will also be laid off, the newspaper said.
A Bank of America spokesman did not immediately respond to a request for comment.
The second-largest U.S. bank laid off more than 9,000 full-time employees in the third quarter. Finance chief Bruce Thompson said on an Oct. 16 conference call with analysts that the reductions were concentrated in the unit that collects payments on current and delinquent home loans, the unit that makes new home loans, and in many of the bank's branches.
Bank of America made $22.6 billion in home loans in the third quarter, down 11 percent from the second quarter. The number of mortgage applications the bank had received but not yet processed fell 60 percent from the end of June to the end of September.
Additionally, mortgage loans that were delinquent by more than 60 days fell by 94,000 to 398,000 in the third quarter. The bank expects delinquent loans to be below 375,000 by the end of 2013.
Rising interest rates have curtailed customers' demand to refinance their mortgage since the spring. The interest rate on a 30-year mortgage stood at 4.39 percent in the week ending Oct. 18, according to the Mortgage Bankers Association, down from a high of 4.80 percent in September but above the 3.59 percent rate in early May.
Bank of America expects to make fewer home loans in the fourth quarter and will look to cut more mortgage jobs, chief executive Brian Moynihan said on the conference call.
The Charlotte, North Carolina-based bank is not the only lender to lay off staff in response to a slowdown in refinancing. Wells Fargo & Co, the largest U.S. mortgage lender, said on Oct. 17 it is cutting 925 mortgage jobs. That comes on top of the 5,300 Wells Fargo mortgage employees that were notified that they would be laid off in the third quarter.