Wells Fargo Home Mortgage Layoffs Announced
Wells Fargo Home Mortgage is eliminating more than 500 jobs in a division that makes home loans to high-risk borrowers, adding to recent distress caused by the decaying subprime (bad credit mortgage market).
Most of the cutbacks in South Carolina, Arizona and California stem from Wells Fargo’s recent decision to make it more harder for borrowers with blemished credit records to qualify for a mortgage.
The tougher home loan lending standards means Wells Fargo will be handling fewer subprime mortgages, reducing the need for as much staff, according to a statement issued late Monday by the San Francisco-based bank.
Wells Fargo spokespeople declined to specify how many employees work in the bank’s bad credit mortgage lending unit, or what type of jobs would be cut. The bank employs about 158,000 workers through all its operations.
Several other subprime mortgage lenders, including the corporate parent of Ameriquest Mortgage, also have been scaling back in response to the recent market turmoil.
Wells Fargo, along with Countrywide Mortgage, ranks among the nation’s largest home loan lenders, but so far has been able to avoid devastating losses.
Other lenders have either already collapsed or are struggling to survive as more subprime borrowers default on exotic mortgages that are graduating to higher mortgage rates after initially offering extraordinarily low rates in order to make payments more affordable.
More than two dozen bad credit home loan lenders have either shut down or gone bankrupt since late last year, and the deepening problems in the subprime sector threaten to ripple through the economy as more workers lose their jobs and more foreclosed homes hit the already slumping housing market.
Lenders’ tighter standards also threaten to decrease the number of people who can afford to buy a home, another factor that could weigh on housing values.
The subprime worries already have rattled the stock market in recent weeks, leaving investors feeling less wealthy than they did just a few weeks ago.
Wells Fargo’s cuts already have wiped out 70 jobs in Tempe, Ariz.
Another 444 workers who received layoff notices last month will leave the home mortgage company in the next few weeks unless the bank can find other positions for them. The upcoming cuts include another 121 positions in Tempe, 252 jobs in Fort Mill, S.C. and 71 jobs in Concord, Calif.
SOURCE: The Times & Democrat