Bank of America to eliminate up to 4,200 mortgage jobs
By Peter Rudegeair
(Reuters) - Bank of America Corp (BAC.N: Quote) said on Thursday that it was cutting up to 4,200 mortgage jobs as fewer borrowers refinance, and fewer home loans go bad.
The layoffs are the latest round of job cuts at major banks as rising mortgage rates cut into demand for refinancing home loans. Wells Fargo & Co (WFC.N: Quote), JPMorgan Chase & Co (JPM.N: Quote) and Citigroup Inc. (C.N: Quote) have announced thousands of layoffs among them in recent months.
At Bank of America, the third largest U.S. mortgage lender, about 1,200 employees were notified this week that they would be terminated. Most were full-time workers in the division that processes new mortgages, a spokesman said.
Before the end of the year, the bank is looking to cut another 3,000 jobs in the division that collects payments from borrowers who are behind, the spokesman added. Most of the layoffs in that division are contractors.
Five years after the financial crisis, many of the loans that should never have been made have already gone bad, leaving banks with fewer troubled loans to manage.
For Bank of America, mortgage loans that were delinquent by more than 60 days fell by 94,000 to 398,000 in the third quarter. The bank expects a further decline to below 375,000 by the end of 2013.
Mortgage lending volume at Bank of America was down 11 percent in the third quarter from the second quarter. The number of applications the bank had received but not yet processed was down 60 percent in the end of September from the end of June.
The bank expects to make fewer home loans in the fourth quarter and will look to cut more mortgage jobs, Chief Executive Officer Brian Moynihan said during an October 16 quarterly conference call with analysts. Continued...