According to sources, “1,200 mortgage employees received notice that their position would be eliminated on Thursday. A majority of the 3,000 cuts will come from temporary contractors, though full-time employees will also be laid off.”
Bank of America cut more than 9,000 full-time employees in the third quarter. Finance executive Bruce Thompson said, “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 over $22.6 billion in home loans in the third quarter, down 11 percent from the second quarter. The number of mortgage application received fell by 60 percent from June to September. The amount of delinquent mortgage loans more than 60 days fell by 94,000 to 398,000 in the third quarter. Bank of America expects delinquent loans to be below 375,000 by the end of 2013.
The rising of interest rates have pushed customers away from refinancing there mortgages. The interest rate on a 30-year mortgage stood at 4.39 percent in the week ending on October 18, according to the Mortgage Bankers Association. The interest rate is down from a high of 4.80 percent in September but above the 3.59 percent rate in early May.
Chief executive Brian Moynihan said, “Bank of America expects to make fewer home loans in the fourth quarter and will look to cut more mortgage jobs.”
Bank of America is based in Charlotte, North Carolina and is not the only lender to lay off staff due to a decline in refinancing. Wells Fargo, the largest U.S. mortgage lender, said on October 17 there will be cutting 925 mortgage jobs.