Although, financial institutions have relaxed a bit from the spate of mass layoffs that took place in the first half of 2014, Bank of America Corp. (NYSE: BAC) is still at it, having announced for the second time in half a year that it will be laying off several workers.
Unlike last year’s job cuts, which mostly impacted divisions handling mortgage origination, Bank of America’s new job cuts will affect its legacy asset servicing unit in Norfolk, due to the reduced number of delinquent mortgage loans. A prepared statement from Bank of America quoted spokeswoman Jumana Bauwens, who said that the bank is “in the process of returning to normal staffing levels.”
The division was created in 2011, in an effort to assist mortgage customers “who were at risk of foreclosure or defaulting on their home loans.” Prior to this round of layoffs, Bank of America laid off a total of 187 workers from its Plano, Tex. office, also in its mortgage servicing division.
Bank of America’s Bauwens previously made a separate statement about how the institution has been doing very well in its goal to assist troubled homeowners with their mortgage payments. “The number of delinquent mortgage loans we service has decreased to one-fifth of their peak levels,” she said in an interview with Housing Wire. “Due to the lower demand for these specialized services, we are reducing the size of the operations. This division was created in 2011 and staffing grew dramatically to support the short-term needs of mortgage customers at risk of foreclosure. Now, we are in the process of returning to normal staffing levels.”
Bank of America’s legacy asset servicing division has pared down its workforce significantly from 2012, when the housing market was still in far worse shape, with no shortage of delinquent customers, foreclosures, short sales, and other negative signs. At that time, the division employed an all-time high total of 42,000 workers. The division’s workforce has since been trimmed to only 15,800 as of the December ending quarter of 2014.
Prior to the October 2014 and February 2015 layoff announcements, Bank of America also laid off 540 legacy asset servicing workers in June 2014. “It’s a really difficult message because the fact that we’ve cut the need for that support thanks to these efforts and an improving economy is a good sign for our company and the customer,” said Bank of America spokesman Daniel Frahm at that time. “But for our employees who have worked so hard to help those customers, this is tough.”
While this appears to be a good sign for the broader housing industry, one should consider the question of whether these employees will be given further opportunities in Bank of America; as of this writing, the institution has not confirmed whether it will be repurposing, or transferring these workers to other divisions once the layoffs take effect.
Still, there is a good chance that that will be case, as it has been on several other occasions where banks have laid workers off to downsize or to “achieve greater operational efficiency,” to borrow a corporate buzzword.