Wells Fargo Bank confirmed on Wednesday
that it will be laying off about 20 percent of its mortgage production staff
because of a drop in its refinancing business.
About 2,300 jobs will be cut from Wells Fargo Home Mortgage principally
in North Carolina, Iowa, and Alabama.
The San Francisco-based lender has said
it expects its refinancing business to be lower for the rest of the year as
higher interest rates cut demand for refinancing. The company had already announced two smaller
reductions to its mortgage staff, 350 announced in mid-July and a 758 person
layoff announced on August 7th. Three hundred additional jobs will be cut over
the next 11 to 17 months as the company winds down eight joint ventures. The company said it had just over 11,400 loan
officers at the end of last March.
In a staff memo obtained by a number of
news agencies, Franklin Codel, head of mortgage production for the bank, said
that refinancing had accounted for about 70 percent of the bank's mortgage
applications during the first half of the year but that has now dropped to
about 50 percent and was expected to decrease further in upcoming months.
"We've had to recalibrate our business
to meet customers' needs," the memo said, "and to ensure we're operating as efficiently and effectively as possible. Unfortunately, displacements within our team
were given 60 days notice of the layoffs on Wednesday. The banks said it will
try to retain as many staff as possible by finding them other positions at the
Fargo is the country's largest mortgage lender writing and servicing one
out of five mortgage loans. The company has written over $100
billion in home loans in each of the last seven quarters. However it told analysts on July 12 that it did
not expect to repeat that in upcoming quarters as mortgage rates rose.