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August 29th, 2013

Banks cut more mortgage jobs

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chopping blockThe U.S. economy might be adding jobs, but in the mortgage sector, sizable numbers of jobs are getting the axe.

That’s according to an index tracked by Mortgage Daily, an online inside-the-industry publication headquartered in Dallas. The publication reported Monday that in the second quarter, loan servicers chopped 10,000 jobs, the most in one quarter since the first quarter of 2009. Fewer than 7,000 new positions were added in the recent quarter, reducing the total mortgage-sector headcount by approximately 3,000 positions.

Declining loan delinquencies

The staff reductions were attributed to declining loan delinquencies, according to Mortgage Daily. The fewer borrowers who are in trouble with their loans, the fewer employee servicers need to manage those delinquent accounts.

The biggest cutbacks occurred at the largest loan servicing companies, while some smaller up-and-coming operations actually expanded their payrolls, Mortgage Daily said in a statement. Altogether, layoffs outnumbered new hires by 2,981 positions during the quarter.

Read: Layoffs: The long-term effect of rising mortgage rates

In the second quarter of 2012, the mortgage sector added 1,335 net positions. In the first quarter of this year, the sector posted its largest growth in employment in nearly four years with 5,129 net new jobs, Mortgage Daily said.

Which states are hiring, firing?

A few states experienced a net gain in mortgage jobs in the second quarter. Florida was up 574 positions, Arizona, 300 positions, and Montana, 242 positions. The biggest loser was California, which cut 1,509 positions. New York lost 1,280 positions. South Carolina dropped 515.

The largest group of cuts–5,000 positions–came from Bank of America, the third largest loan servicer in the U.S., Mortgage Daily reported.

The pain for dismissed workers is likely to deepen in the third and fourth quarters, Mortgage Daily added.

According to news reports, Wells Fargo, the biggest U.S. mortgage lender, recently sent layoff notices to 2,300 mortgage employees. The effect of those 60-day notices will show up in the third quarter.

The upshot

The upshot for consumers might be less help in loan servicing, but more solicitations and faster processing of applications for new loans.

The Mortgage Daily index is based on company announcements, state employment data and quarterly surveys.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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