Bank of America is laying off 250 mortgage and technology workers in Charlotte as the No. 2 U.S. bank continues to reduce its portfolio of bad loans.
The bank informed employees on Wednesday and plans to send a notice to state officials by the end of the week, bank spokesman Dan Frahm said. Most of the affected employees work in Gateway Village on West Trade Street, he said.
In June, Bank of America said it was laying off 540 of its Charlotte employees in the division that handles troubled loans, known as Legacy Asset Servicing. That was nearly two-thirds of that unit’s local workforce. Of those 540 workers, 150 were able to stay on in short-term positions but are now being laid off as part of the 250 announced on Wednesday.
The 150 workers in short-term roles, as well as some of the other employees, had been working in technology positions, working with Legacy Asset Servicing and other business units.
Sign Up and Save
Get six months of free digital access to The Charlotte Observer
Bank of America was notifying employees about layoffs in other cities Wednesday, but Charlotte had the largest concentration of affected workers, Frahm said.
The bank will continue to employ about 15,000 in Charlotte, he said. Displaced employees will be able to apply for other open positions at the bank, he said.
The bank said affected employees will be paid until mid-April and will receive severance.
The announcement of the Charlotte layoffs comes after the bank last week announced plans to eliminate 202 Legacy Asset Servicing jobs in Norfolk, Va. In the fourth quarter, the bank reduced its Legacy Asset headcount by roughly 1,000 from the third quarter, CEO Brian Moynihan said last month.
Bank of America built up the troubled-mortgage division to work with the flood of borrowers struggling to pay their mortgages in the aftermath of the financial crisis. Many of the borrowers had taken out loans with subprime lender Countrywide Financial, which Bank of America bought in 2008.
Marty Mosby, an analyst with Tennessee-based Vining Sparks, said Bank of America had to add more staff to deal with troubled-mortgage borrowers in the wake of the housing bust than any other lender – thanks to the many Countrywide loans that soured.
“They had got hit so hard with Countrywide,” he said. “They had to significantly amp up resources in order to work out all those loans that needed so much attention.
“It’s taken literally five years to get to the back end of it. That is part of the pain and agony that came with Countrywide.”
Bank of America has been eager to reduce costs in the division as it looks to boost profits at a time when banks are struggling to increase revenue.
Last month, the bank’s chief financial officer, Bruce Thompson, said the bank is seeking to lower its quarterly Legacy Asset Servicing costs, excluding litigation expenses, to $800 million by the end of this year. That’s down from $1.1 billion in the fourth quarter of 2014.
At the end of December, Bank of America had 17,100 employees in the troubled-mortgage division, including contractors. That was down from nearly 50,000 in 2012.
The decline in Legacy Asset headcount comes as the bank has seen ongoing declines in the number of mortgage loans that are delinquent by 60 or more days. The bank reported 189,000 such loans in the fourth quarter, a drop of 42 percent from the same quarter a year earlier.