Wells Fargo (WFC) Slashes 581 Jobs in Mortgage Operations

Wells Fargo & Company WFC is set to eliminate 581 employees in its mortgage operations as the company has been seeing reduced delinquencies and foreclosures.

On Thursday, a release by the San Francisco Business Times, quoted Wells Fargo spokesman Ruben Pulido, "Delinquency and foreclosure rates for mortgage loans have declined to the lowest level in four years and are expected to continue to move closer to historical averages in the coming year." Pulido noted that driven by such improvement, home lending servicing business functions including collections, foreclosure and bankruptcy, are witnessing decrease in overall volumes.  

Also, the demand for mortgage financing has experienced "modest" improvements. Amid such a backdrop, considering current market conditions and customer needs, the San Francisco-based banking giant is lowering staff "to better align with current volumes."

The layoffs cover a number of regions including Charlotte, Raleigh-Durham, Minneapolis, Seattle and Portland. However, Wells Fargo intends to retain most of its affected employees by placing them in other functions of the bank.

Driven by the sub-prime mortgage crisis in 2008, banks across the U.S increased their workforce to serve rising mortgage delinquencies and foreclosures. However, with the housing market on a rebound and gradual recovery in the economy, the volume and severity of such loans have gone down.

We believe the job cuts will help improve work-force efficiency. This, in turn, would provide opportunities for improving operating leverage and pulling up earnings in the quarters ahead.

Wells Fargo carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include American Capital, Ltd. ACAS, Popular, Inc. BPOP and National Bank Holdings Corp. NBHC, each sporting a Zacks Rank #1 (Strong Buy).

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