Wells Fargo said Wednesday it’s laying off 284 employees in Charlotte as the bank trims its mortgage work force amid declining demand for refinancings.
The positions are among 2,323 nationwide job cuts the company announced Wednesday, saying fewer homeowners are refinancing as interest rates rise.
The Charlotte job cuts are mostly in Wells Fargo’s fulfillment division. Wells Fargo spokesman Josh Dunn said most of the 2,323 positions being eliminated companywide are in that division, which processes applications for mortgages and refinancings.
The 284 Charlotte jobs being cut represent 1.4 percent of the 20,750 people Wells employs in the nine-county Charlotte area. Dunn said 48 fulfillment jobs in Raleigh will also be cut.
Home refinance volumes that boosted Wells to record profits in recent quarters are continuing to taper off. For more than a year, applications flooded in as homeowners sought to lock in historically low mortgage rates.
But those rates have inched up steadily over the past few months and are now about a full percentage point higher than they were a year ago, according to data from mortgage giant Freddie Mac.
“While interest rates remain very favorable by historical standards for homebuyers and lenders, the fast-paced consumer demand for mortgage refinancing we experienced throughout 2012 and early 2013 is slowing,” Dunn said in an email.
Wells Fargo said refinancings comprised 56 percent of its mortgage originations in the second quarter of this year, compared with 62 percent a year ago. The bank’s mortgage applications totaled $146 billion in the second quarter, compared with $208 billion a year ago.
In the first quarter of 2012, Wells Fargo made roughly one in three U.S. mortgage loans, according to Inside Mortgage Finance. Its market share has since fallen, to about 23 percent in the second quarter of this year.
Wells has said it expects rising interest rates to continue to weigh on its mortgage business. But the company’s executives have repeatedly told analysts that they expected to be able to quickly scale back the bank’s mortgage division as refinancing activity inevitably declined.
“We are very good at sizing the business based on what’s going on,” CEO John Stumpf told analysts in a July conference call. “We’ve done that many times.”
Wells executives still voice optimism about the housing market, saying new home purchases could pick up some of the slack left by the drop in refinancings.
Stumpf also said that waning refinance volume from rising interest rates tends to lead to better credit quality and higher consumer and business confidence.
“I would take that trade all day long,” Stumpf told the analysts.
Wells Fargo shares closed Wednesday at $42.36, down less than 1 percent.
W.T. Harris employees affected
Wells Fargo employees who work at the bank’s Customer Information Center on West W.T Harris Boulevard said some of the laid-off personnel are employed at the center. The employees declined to give their names, saying they were not authorized to speak publicly about the layoffs.
Workers whose positions were eliminated were told to attend a Wednesday meeting at the center, where they learned their jobs were being cut, two Wells employees told the Observer.
“They took everybody into the auditorium down there ... and let them know in there,” said one employee, who works in a different division at the center and whose job was not cut. The person said he knew of a coworker in underwriting whose position was among the eliminated.
“If you didn’t get the email or a call … you were fine,” said another worker, whose job at the center was not cut.
“All managers got canned,” this person added.
Dunn declined to comment on titles of laid-off employees.
The bank said it has given employees 60 days’ notice of the layoffs.
Wells expects its employment level in Charlotte to remain near 20,750 as the bank hires in other lines of business, Dunn said.
“This is in no way an indicator that Wells Fargo is pulling back from Charlotte,” he said. “Unfortunately, this is an industry trend. This is not just impacting Wells Fargo.”
Wells Fargo employs more in Charlotte than in any other city, including its headquarters in San Francisco. The bank’s second-largest presence is in Minneapolis, with about 19,600 employees.
Bank of America says it employs roughly 15,000 in the Charlotte region. In June Bank of America confirmed it was cutting dozens of jobs in Charlotte, “across multiple lines of business,” but did not provide further details.
In Mecklenburg County, banking jobs have not returned to prerecession levels. The finance and insurance sector employed 51,490 last year, according to federal data. That’s down from 53,917 in 2007, before the recession and financial crisis.
Closing call centers
Guy Cecala, publisher of Inside Mortgage Finance, said lenders have had to increase mortgage servicing staff in recent years because of the foreclosure crisis and increased pressure from regulators. But lenders have been able to reduce that payroll as troubled home loans have declined in number.
“The result of it is we see increased revenue on the servicing side from companies like Wells Fargo,” he said.
In the past month, the mortgage industry has been experiencing layoffs in mortgage production thanks to the end of the refinancing boom, he said. Most of the job cuts target those who worked with customers interested in refinancings.
“We’re seeing people closing call centers or laying off people in call centers,” he said. “Those people are idle these days. They’re not getting a lot of calls.
“Anything that’s refinance-oriented, as soon as mortgage rates went up to 4.5 percent ... the calls for refinances just dried up.”
Staff Writers Andrew Dunn and Rick Rothacker contributed.
Roberts: 704-358-5248; Twitter: @DeonERoberts
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