Bank of America to Cut 3,000 Mortgage Jobs

Spencer Platt/Getty Images Bank of America said Thursday that it was cutting 1,200 to 1,300 mortgage jobs because of declines in refinancing activity and an improvement in its portfolio of delinquent home loans. The employees are based in divisions that handle processing new mortgages and service home loans that are past due, a spokesman said. They received notice this week that their positions were being eliminated. News of the layoffs was first reported by the Wall Street Journal. The newspaper also said Bank of America (BAC) was looking to cut 3,000 mortgage jobs by the end of the year. The spokesman couldn't immediately confirm that number. 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. Also, 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. Rising interest rates have curtailed mortgage refinancing since the spring. The interest rate on a 30-year mortgage stood at 4.39 percent in the week that ended Friday, 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 Officer Brian Moynihan said on the conference call. The Charlotte, N.C.-based bank isn't the only lender to lay off staff in response to a slowdown in refinancing. Wells Fargo (WFC), the largest U.S. mortgage lender, said on Oct. 17 that it was 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.