Bank of America Corp. (NYSE: BAC) announced last week that it is laying off approximately 250 mortgage and technology employees from its Charlotte offices, as the second-leading financial institution of the U.S. continues making moves to reduce its portfolio of soured loans.
According to Bank of America spokesman Daniel Frahm, the institution notified employees on Wednesday and planned to inform North Carolina state officials by the end of the last week. Frahm was also quoted as saying that majority of the affected employees are assigned to the Gateway Village office on Trade Street. This comes little more than half a year after Bank of America said in June 2014 that it will be laying off 540 Charlotte employees in its Legacy Asset Servicing division, or the arm that takes care of troubled, or soured mortgage loans.
At that time, the layoff represented a two-thirds reduction of the local workforce for that unit. 150 of the workers remained employed on a short-term basis, but with the new move, they are included among the 250 job cuts announced last week.
The 150 short-term employees, together with some of the other layoffs, were employed in technology positions, and were assigned to either Legacy Asset Servicing or other arms within Bank of America. In addition to the 250 Charlotte employees, Frahm also said that there are layoffs occurring in other cities, but Charlotte has the highest percentage of job cuts in this current round. Additional quotes attributed to Frahm suggest that Bank of America will still have a workforce of about 15,000 in Charlotte, while some workers may have a chance to apply for other open positions within the bank. Affected employees will still receive pay until mid-April, and will also be eligible for severance pay.
Last week, Bank of America also announced that it is planning to lay off 202 workers from its Legacy Asset Servicing division in Norfolk. This, according to Bank of America Chief Executive Brian T. Moynihan, came after the institution eliminated about 1,000 Legacy Asset Servicing jobs in the December ending quarter of 2014.
This division had been beefed up in the wake of the U.S. housing crisis, in an effort to provide assistance to troubled borrowers having difficulty in paying off their home loans due to the housing crisis, and the broader global recession. Many of these troubled consumers had taken out their mortgages with Countrywide Financial, a subprime lender Bank of America had acquired in 2008.
The high number of soured Countrywide mortgages, say experts, was the reason why Bank of America had taken the initiative to bolster its Legacy Asset Servicing division, but with the U.S. economy and mortgage market improving, the bank is now making efforts to improve profits, as opposed to other banks who focus on improving their revenue. “It’s taken literally five years to get to the back end of it,” said Vining Sparks analyst Martin Mosby, referring to the time it took for Bank of America to sort things out with regards to the Countrywide debacle. “They had to significantly amp up resources in order to work out all those loans that needed so much attention.”