The housing market is recovering, and fewer loans need servicing.
While this is good news for the market and homeowners, it also means less loan servicing — a development that's resulted in hundreds of job cuts at major U.S. banks.
Right now, JPMorgan Chase (JPM) is in the midst of enacting major servicing cuts. One of the major reductions taking place is in Florence, S.C., where 450 JPMorgan employees are expected to lose their jobs. And in San Diego, 730 positions will be impacted, according to Jason Lobo, a spokesperson for JPMorgan Chase.
Lobo says the cuts are part of an announcement made back in February when JPMorgan said it would reduce mortgage staffing levels by 13,000 to 15,000 over the course of the next year. Lobo says the Florence and San Diego cuts are part of this previously announced plan.
Like other firms, JPMorgan is simply responding to declining demand on the servicing side of the house.
"We are responding to our customers’ changing needs," Lobo said. "Fewer homeowners are struggling with their mortgages and many people have already refinanced, taking advantage of the stronger economy and historically low rates. Our active talent reassignment program will work with affected employees to find openings at Chase or other local companies."
Lobo says JPMorgan’s modification pipeline fell 75% from its 2011 peak. Furthermore, its foreclosure inventory is down 42% from the same period.
"To date we’ve reassigned about 7,000 employees," Lobo said when discussing the larger staff reduction. “Employees will remain working for a minimum of 90 days.”
And it’s not just JPMorgan. Mega bank Wells Fargo (WFC) plans to lay off 763 employees within its home mortgage division.
The summer months brought bad news to other servicing shops as well.
OneWest announced plans a few months ago to lay off 725 employees at a customer service facility in Austin, Texas, according to a notice filed with the state of Texas.