Wells Fargo To Cut More Than 2,000 Mortgage Jobs
Wells Fargo has announced this week that it plans to lay off 2,300 people in mortgage-related jobs around the country.
The bank is the largest mortgage lender in the United States, accounting for nearly a third of all home loans in 2012. However, rising interest rates have meant fewer customers interested in refinancing and, as a result, significantly less work to do for employees in the home loan department.
The bank predicts that mortgage lending and refinancing will continue to slow through the end of the year as rates bounce back from recession lows. For the first half of 2013, refinancing accounted for more than 70 percent of home lending business for Wells Fargo. Since then, however, refinancing has fallen to just 50 percent of its mortgage business.
We’ve had to recalibrate our business to meet customers’ needs — and to ensure we’re operating as efficiently and effectively as possible,” said Franklin Codel, the company’s head of mortgage production, in a memo to staff. “Unfortunately, displacements within our team are necessary.”
The widespread layoffs account for about 3.3 percent of the company’s employees in the consumer lending sector.
Employees received 60 days’ notice on Wednesday of the layoffs. It’s not all bad news for the affected employees, however. Wells Fargo is doing its best to retain as many employees as possible by placing them in other jobs within the company.
The layoffs shouldn’t come as much surprise for those paying attention to trends. The bank has a history of hiring and laying off thousands of employees at a time based on a volatile mortgage market, and this new wave of layoffs is nothing new. The company spent nine months of 2010 hiring nearly 6,000 workers in the mortgage sector, for example, before letting go of 5,000 in the next six months.
Additionally, Wells Fargo has been on a hot streak lately which executives believe is finally coming to an end. The bank created more than $100 billion of home loans per quarter for the last seven quarters because of a slumped economy and record low lending rates.
Now the bank is gearing up to see more sustainable numbers. In a conference call last month, Chief Financial Officer Tim Sloan said, “We just don’t think that we are going to see $100 billion of mortgage volume, given the current rates today, in the third quarter. We will need to go ahead and make some adjustments.”
Despite the necessary changes, executives at Wells Fargo aren’t worried about the company’s future.
Executives have taken this opportunity to remind shareholders of the bank’s diversified business model and numerous profitable sectors outside the mortgage business. As Sloan put it, “The mortgage horse has been a big, strong horse. We’ve got 89 other horses that are going to be able to grow.”
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