Wachovia Corp. on Monday said it's making deeper cuts in its troubled mortgage unit.
The Charlotte bank said in a filing that a cost-cutting campaign will eliminate 6,950 positions companywide, 600 more positions than announced last month. The additional reductions are all in the mortgage business, which previously had been set to absorb 4,400 of the reductions, spokeswoman Christy Phillips-Brown said.
The bank is slashing mortgage positions in the face of slowing business and ballooning loan losses. The bank made an ill-timed expansion into the mortgage business by buying California-based Golden West Financial Corp. in 2006 at the peak of the housing boom.
The company now plans to eliminate 5,000 of its 11,500 mortgage posts, about 43 percent of the workforce. With the latest cuts, Wachovia will have eliminated about 8,100 mortgage jobs, including attrition, since the deal closed. Those cuts have affected employees from both companies, but Golden West workers have taken the brunt of the fallout.
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Also on Monday, Wachovia confirmed it is scaling back mortgage lending in 16 states where it has no retail bank branches and in three other states where it has a limited branch presence.
The Charlotte bank is closing mortgage offices in these 19 states but will continue to offer mortgages to customers through its Web site, call center and direct-mail channels, spokesman Don Vecchiarello said. In Illinois, Kansas and Mississippi, Wachovia also will offer a limited selection of mortgage products through its retail bank branches, which will remain open.
The latest action will eliminate about 125 jobs and shutter an undisclosed number of offices.
Closing the mortgage offices is part of the bank's strategy to “enhance customer relations” in locations where the bank also has bank branches, Vecchiarello said. Wachovia has branches in 21 states from Connecticut to California.
Vecchiarello emphasized the bank is still offering a full line of mortgage products through branches and mortgage offices in 18 states and to a broader customer base through its Web site and call centers.
In states where Wachovia has branches, Vecchiarello said, the bank continues to have a dual sales force – mortgage consultants based in mortgage offices who work on commission as well as branch-based consultants who receive a salary. Wachovia's head of retail mortgage sales, Scott Fisher, is evaluating this structure, Vecchiarello said.
The bank is in the midst of a broad overhaul of its mortgage operations amid ongoing fallout from the Golden West deal. The bank has stopped making controversial Pick-A-Payment loans, Golden West's signature adjustable-rate mortgage product, and it is no longer making loans through outside brokers.
Wachovia posted a $9.1 billion second-quarter loss, partly because it set aside $5.6 billion to cover bad loans. The bank has said it expects cumulative losses of 12 percent over the lifetime of the $122 billion Pick-A-Payment portfolio, with most of the damage coming in the next three years.