Housing market healed?? Get real! Home prices have plummeted to record lows.
BofA cuts 1,200 mortgage jobs, with more layoffs coming
The nation's banks have seen a sharp slowdown in profits from refinancing as mortgage rates rose from historic lows while the housing market healed.
NEW YORK — Bank of America Corp. is slashing 1,200 jobs in its mortgage division as the company's refinancing business slows amid rising interest rates.
The Charlotte, N.C.-based bank made the cuts this week, a BofA representative said. The jobs are scattered around the country, including some in California, but the bank declined to elaborate.
The nation's banks have experienced a sharp slowdown in once-booming profits from refinancing as mortgage rates rose from their historic lows while the housing market healed.
BofA is planning to cut about 3,000 more jobs by the end of this year, but they are mostly contractors in its legacy asset servicing division, the bank said.
While there has been a slowdown in mortgage refinancing, there has also been a drop in customers needing assistance with short sales or modifications. Delinquencies have also declined as borrowers' ability to repay has improved along with the economy's upswing.
Other major banks have been issuing pink slips to thousands of mortgage employees too.
The country's No. 1 mortgage lender, Wells Fargo & Co., said in late August that it would eliminate the jobs of 2,300 workers who had processed refinance applications. That's about 3% of the 70,000 employees in the San Francisco-based financial giant's consumer lending group.
JPMorgan Chase & Co., the second-largest mortgage originator, said this month that it would eliminate 3,000 mortgage jobs as the business slows down — part of a previously announced plan to downsize the mortgage staff by 15,000 by the end of next year.
Mortgage rates have recently tumbled, though they are still off their historic lows.
Mortgage giant Freddie Mac said Thursday that lenders were offering the 30-year loan early this week at an average 4.13%, down from 4.28% last week. The average rate for a 15-year fixed mortgage, often a choice when homeowners refinance, also dropped sharply, averaging 3.24% compared with last week's 3.33%.
The layoffs come as Bank of America continues a long-term effort to trim expenses and slim down as the financial giant overcomes a hangover from the mortgage meltdown and financial crisis.
BofA has about 248,000 employees, down from 267,000 at the end of last year.
As the bank tries to pare expenses, it may have to pay a significant civil penalty. On Wednesday Bank of America lost a civil fraud case in New York. The Justice Department accused Countrywide Financial Corp., which BofA bought in 2008, of defrauding mortgage giants Fannie Mae and Freddie Mac.
Prosecutors want Bank of America to pay $848 million, but the judge who oversaw the trial will determine how much the bank will pay. The bank said it may appeal the jury's verdict.
BofA shares fell 4 cents to $14.17 on Thursday.
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