Wells Fargo Home Mortgage Plans More Cuts
In yet another sign of a rapidly shifting lending atmosphere, Wells Fargo Home Mortgage said Tuesday that it will close a Fort Mill, S.C., lending operations center that employs 250 people.
The home mortgage company still employs more than 1,700 people in Fort Mill in a different division and said it will hire another 200 people for that operation, including some of those losing jobs.
The center Wells Fargo Home Mortgage is closing, not surprisingly, is part of its high-rate (bad credit home loan) lending business.
The employees approve funding for loans made by mortgage brokers, and also home purchase loans made by other lenders.
Wells Fargo also said it plans to shut down a similar operations center in California.
The cuts are the latest fallout from problems in the business of making mortgage loans at high interest rates to people who don’t qualify for a conventional mortgage.
Demand for high-rate, bad credit home loans is shrinking as defaults on existing mortgage loans are rising, leaving mortgage lenders with fewer revenues and more expenses.
Wells Fargo Home Mortgage, based in Des Moines, Iowa, is one of the biggest home loan lenders in the U.S. and one of the largest specialists in high-rate / bad credit home mortgage loans. It is a subsidiary of Wells Fargo & Co., which is based out of San Francisco, Calif.
The company has responded to the defaults by tightening the requirements for new loans, further shrinking its volume. It said the new requirements also reflect its voluntary commitment to help customers get the absolute lowest mortgage rates they can qualify for.
Because of the lost volume, the company said it is cutting employment in the division to 650 from 1,100. The cuts include the 250 in Fort Mill.
“It’s a challenging day, it’s a hard thing, but it’s a business decision that had to be made,” said James Wyble, the executive who leads the operation, who was in Fort Mill on Tuesday to discuss the cuts with his employees.
The company said it remains committed to treating the affected employees “respectfully,” including giving a 60-day notice of termination and a severance package whose terms depend on the length of employment.
SOURCE: Charlotte Observer