Citigroup said Thursday it is laying off 150 workers at its Fort Mill, S.C., operation, underscoring the ongoing flux in the U.S. mortgage industry.
The nation’s third-largest lender by assets employs 900 at the site just off Interstate 77. The layoffs represent 17 percent of the workforce at the operation.
The company said the workers were in mortgage loss mitigation, a division that works with homeowners who have fallen behind on mortgage payments.
That announcement came just a day after Wells Fargo said it plans 284 Charlotte layoffs, which the bank said stem from fewer homeowners refinancing in the face of higher interest rates. The layoffs are part of 2,323 Wells Fargo job cuts nationwide, the San Francisco-based lender said.
Banks say they need fewer people to assist troubled borrowers as more customers make timely payments. At the same time, fewer homeowners are refinancing as interest rates start to climb.
The downsizing of the mortgage industry has left workers in the Charlotte area scrambling to find new jobs.
Phil Mahoney, president and CEO of Charlotte-based American Security Mortgage, said his company has fielded job inquiries from employees laid off by lenders in Charlotte because of lower refinancing activity. “We’re getting a fair amount of calls,” he said.
Banks found refinancings a ready source of revenue when home sales tanked in the recession. Now banks are reducing mortgage-related staff nationwide as they try to become more profitable in a shifting housing market. Home purchases are rising, but by some estimates they won’t be enough to offset the shrinking demand for refinancings.
Banking industry observers expect more layoffs, especially if mortgage rates keep climbing.
“These employees expect this. It’s part and parcel of the cycle,” said Joe Morford, a bank analyst with RBC Capital Markets.
Morford said the job cuts announced by lenders so far are “probably on the earlier end,” with more expected. Banks, he said, “will move fast” to make necessary cuts.
He expects additional layoffs by big banks, including Bank of America, Citi, JPMorgan Chase and Wells.
On Thursday, mortgage buyer Freddie Mac said the average rate on a 30-year loan rose to 4.58 percent, up from 4.4 percent last week. The average on 15-year loans jumped to 3.6 percent from 3.44 percent. Both averages are the highest in two years.
Rates have risen as the Federal Reserve has signaled it may scale back its bond-buying program later this year. The bond purchases have been credited with keeping mortgage rates low.
The Mortgage Bankers Association, in its latest forecast, said it expects mortgage rates to hit 4.7 percent in the fourth quarter for a 30-year fixed-rate mortgage. It also expects refinancings to drop by more than half next year, to $388 billion.
The association predicts a rise in home purchases – but not enough to offset the decline in refinancings. New mortgages for purchases and refinancings are expected to fall 31 percent to $1 trillion in 2014 from $1.6 trillion in 2013.
In addition to refinancing personnel, lenders don’t need as many employees to work with homeowners behind on mortgage payments. In June, Charlotte-based Bank of America told Texas regulators that it would eliminate roughly 400 jobs from a unit that services troubled mortgages. The cuts are expected to be completed by Sept. 30.
‘Committed to the Fort Mill area’
The Citigroup layoffs come as the lender is reporting fewer mortgage delinquencies. In the second quarter, Citi said mortgages that were more than 30 days delinquent fell to $5.5 billion from $8.5 billion a year ago.
New York-based Citi said its layoffs are part of a companywide cost-cutting plan announced in December. In that announcement, Citi said that it planned to slash 11,000 jobs worldwide.
Citi’s 165,000-square-foot Fort Mill operations center opened in 2005 as a facility to house customer service, collections and other workers for its consumer-credit business. The company relocated the operation from Charlotte.
Citi said it told the Fort Mill workers Wednesday that their jobs would be eliminated by the end of the year. The company said it will work with the employees to help them find jobs within Citi and with other employers.
“We remain committed to the Fort Mill area,” Citi spokeswoman Janis Tarter said in an email.
She said Citi employs approximately 1,250 people in South Carolina and 1,000 in North Carolina. Citi did not provide a Charlotte-area employment breakdown.
A rise in job seekers
Mahoney, of American Security Mortgage, said he began seeing an increase in inquiries from job seekers about 45 days ago.
In that time, his company has received roughly 20 resumes, he said, “which is high for us.”
The applicants include mortgage underwriters and processors. Rising interest rates have cost them their jobs, he said.
“They were all working for banks: the SunTrusts, the Fifth Thirds, the Wells Fargos,” he said.
Unfortunately for those applicants, Mahoney said he doesn’t have enough openings.
“Our business is steady,” he said. “But we’re not overwhelmed” with work.
Roberts: 704-358-5248; Twitter: @DeonERoberts
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