Bank of America Corp. (BAC:US), the second-largest U.S. lender, is cutting about 1,300 more jobs in its mortgage division as the firm adjusts to lower demand, said two people with direct knowledge of the plans.
Affected employees (BAC:US) were told yesterday about the cuts, which mostly involve the Charlotte, North Carolina-based firm’s home-loan fulfillment workers, said the people, who asked for anonymity because the changes are private. Those losing jobs will receive pay through Dec. 22 and are eligible for severance packages after that, said the people.
The latest round of reductions means Bank of America will dismiss about 3,000 people involved in making home loans in the fourth quarter. In August, the company had notified its staff of about 2,100 eliminations by the end of this month, mostly in areas processing new home loans. Mortgage lenders are paring headcount as higher interest rates discourage the refinancings they relied on to fuel profits.
“In line with the industry, we are realigning our cost structure in response to lower customer demand for mortgage refinancing,” Dan Frahm, a Bank of America spokesman, said in an e-mailed statement. “We are working with employees to identify opportunities both inside and outside the bank.”
Wells Fargo & Co., the biggest U.S. mortgage lender, has cut more than 5,700 positions since midyear, and No. 2-ranked JPMorgan Chase & Co. has said it may dismiss 15,000. Both reported third-quarter mortgage revenue declines of more than 40 percent, and Bank of America saw revenue in that division drop by almost half to $1.58 billion.
During an earnings conference call last week, Bank of America executives warned that the job eliminations would continue. Pending mortgages at the end of the third quarter dropped 60 percent from the second quarter, indicating a steep drop in demand, Chief Financial Officer Bruce Thompson told analysts on Oct. 16.
Bank of America’s full-time staff totaled 247,943 at the end of September after more than 9,200 jobs were cut during the quarter, or 3.6 percent of the workforce, the lender said last week. Most of the cuts were in home loans, including the division servicing delinquent and risky borrowers, as well as those from branch closures.
The lender may also trim 3,000 positions in the legacy assets servicing unit before year-end, said a person with knowledge of the plans. Most will be outside contractors hired to handle overdue borrowers, the person said.
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