The mortgage business will remain a “core product” for J.P. Morgan, although the bank will look to gain market share with a leaner staff, setting a somewhat somber tone for mortgage hiring in 2013.
The nation’s biggest bank on Tuesday confirmed plans to eliminate between 13,000 and 15,000 jobs in its mortgage unit by the end of next year, along with 3,000 to 4,000 in its community banking business.
The decision highlights both a positive and a negative trend for J.P. Morgan and its U.S. rivals. The majority of the cuts will affect employees dealing with defaults, which are down across the board. Banks no longer need thousands of employees to review sour mortgages and help customers through the foreclosure process. That’s good news, albeit not for those who will lose their jobs.
On the other hand, big banks are not generating the same level of profit that they used to from new loans due to increased competition, among other factors. Bloomberg reported last week that margins may be down as much as 40%. That’s the bad news. Kevin Watters, the head of the J.P. Morgan’s mortgage operations, acknowledged as much.
In the current environment, mortgage hiring should remain relatively healthy in key areas, with most cuts affecting borrower relief and foreclosure areas, which are essentially customer service departments, a mortgage expert told Bloomberg. Bank of America, for example, said it plans to hire thousands in the coming year.
But when refinancing slows and interest rates eventually rise – and if margins remain paper thin – the mortgage hiring boom could soon be over.
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Bank of America’s regrettable decision to abruptly impose a $5 monthly fee on debit- card users had Chief Executive Brian Moynihan’s fingerprints all over it.
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