Following a pleasant holiday weekend, hundreds of Bank of America mortgage employees returned to work only find out they will soon be out of a job. The layoffs, prompted by rising rates and declining applications, have been preceded by similar moves at other mortgage companies recently.
Mortgage associates from a number of mortgage loan fulfillment centers across the nation received layoff notices Tuesday, according to BoA spokeswoman Julie Davis. While in some centers only one to three workers found they would soon be unemployed, the largest portion of the layoffs will occur at a Wichita, Kan., location -- where about 90 full-time employees received notice.
Davis said waning refinancing activity and overall decreased mortgage application activity were the cause of the layoffs.
"Across the industry we've seen application volume decline as mortgage rates have started to rise," Davis said, adding that BoA has "not cut full-time staff since we staffed up to handle the unprecedented volume created by the drop in mortgage rates last summer."
BoAs mortgage origination total of $23.9 billion in the first quarter was down about 40% from the $40 billion range it stood at in each the second and third quarters of 2003. Last June, rates hit a record low when the 30-year averaged 5.21%.
Most of the associates were informed they'd be laid off in two weeks, while others received a 60-day notice, Davis said. Most of the employees are eligible for severance.
Overall, the company's Consumer Real Estate division currently employs approximately 13,000 associates. After staff reductions, the Wichita mortgage fulfillment center will have 400 associates under its arm.
The mortgage unit's announcement comes after layoff reports from other mortgage lenders such as Washington Mutual, which eliminated 2,900 full-time equivalent positions in the first quarter also due to slowed refinancing activity, and Regions Financial Corp., which said its merged operations with Union Planters Corp. would eliminate 450 mortgage associate positions.
Industrywide, employment in the mortgage sector was reported by the Department of Labor at 444,300 in March, increasing from February's revised figure of 436,700.