Bank of America Corp (NYSE:BAC) plans to cut 3,000 jobs in its mortgage operations during the fourth quarter, sources familiar with the matter told Shayndi Raice of The Wall Street Journal. Bank of America plans to reduce expenses as its delinquent loan portfolio and mortgage refinancing shrink. On Thursday, the Charlotte, North Carolina-based bank issued notice to 1,200 workers at its legacy mortgage group and home loans fulfillment division that they will be laid off.
Bank of America realigns its cost structure
Bank of America Corp (NYSE:BAC) will also cut jobs in its legacy asset servicing group, which oversees its mortgage portfolio. The legacy asset servicing unit services current as well as delinquent loans. Full-time employees and contract workers both will be the victims of job cuts. The bank had brought a large number of contractors to handle delinquent loans after it acquired Countrywide Financial Corp. in 2008. However, Bank of America hasn’t yet decided the exact breakdown of job cuts. Sources said that most of the layoffs will take place in Texas, Florida and California.
A Bank of America Corp (NYSE:BAC) spokesperson said that the bank will trim the size of its delinquent loan operations. The bank is also realigning its cost structure as demand for mortgage refinancing declines, the spokesman said. Last month, the bank announced it will axe 2,100 jobs by closing 16 offices. Bank of America had also laid off 1,000 employees in August.
Bank of America liable in mortgage fraud
The Manhattan federal court found the bank liable for mortgage fraud for Countrywide Financial’s “The Hustle” program. Mortgage finance firms Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) lost millions of dollar due to the program during the financial crisis.
The court decision comes after a month-long trial. The Manhattan court said that Coutrywide Financial had processed mortgage applications without scrutinizing for misrepresentations, wrongdoings and fraud.
Bank of America Corp (NYSE:BAC) shares tanked 0.77% to $14.10 at 11:08 AM EDT.