Bank of America is cutting thousands jobs as it responds to changes in the housing market, echoing moves by other banks.
The country’s second-largest bank laid off 1,200 employees this week, primarily from a unit that handles mortgage origination, company spokesman Terry Francisco said. He said the move is a response to a “significant” drop in refinancing applications that has been happening since the middle of this year.
During the fourth quarter, Bank of America plans to cut 3,000 jobs. The bulk of those will be in its unit that handles troubled mortgages, such as foreclosures or loan modifications, as the economic recovery has eased the number of borrowers in distress. Francisco said many of the cuts affect contractors who were hired during peak demand. The bank declined to specify where in the country the job cuts would take place.
The company has been cutting jobs since CEO Brian Moynihan took over in early 2010 as part of a broader strategy to make the bank easier to manage and to reduce exposure to riskier businesses.
Its total full-time employee base has shrunk to 247,943 full-time employees as of the end of its most recent quarter, down 9 per cent from 272,594 at the same time last year. This includes a number of recent reductions in the same distressed borrower unit that faces cuts just ahead.
The banking job cuts go well beyond Banks of America.
The economic recovery has lessened the number of troubled mortgages nationwide. Meanwhile, the improved economy and lower interest rates boosted demand for this spring and summer’s home buying season. But that activity, along with refinancing, is slowing as interest rates rise.
A number of lenders have slashed jobs in response to the changing market.
Wells Fargo said last month that it would cut 1,800 mortgage related positions after cutting about 2,300 jobs from the same unit in August. Citigroup said in September that it is slashing about 1,000 jobs in Nevada and Texas, citing decreased demand for home loans and mortgage refinancing. And SunTrust Banks Inc. said last week it will cut 800 positions in its mortgage business based on current market conditions
Shares of Bank of America Corp., based in Charlotte, N.C., slipped 4 cents to close at $14.17 amid a broader market uptick.