Bank of America cuts jobs again, declining refi market to blame?

Last month, retail banking giant Bank of America (BoA) announced its plans to layoff 4,500 employees as part of its ongoing FleetBoston Financial integration. It already had plans to lay off 12,500 employees as a result of the merger completed April 1, which hailed to "bring unrivaled convenience and advantage to more than 35 million households and businesses across the country."

The merger created the fourth most profitable company in the world and made BOA the world's second-largest banking company.

While many of the layoffs were tellers and branch employees, it's not known how many mortgage-related positions are affected. In a press release, BoA reported that the job reductions would be "in predominantly non-customer-facing positions," allowing the company to continue to "provide customers high standards of service, while retaining the ability to invest in growth opportunities."

However, a spokeswoman recently told National Mortgage News that "one of the three drivers of this reduction was in fact the decrease in mortgage refinancing" and that BoA has "right sized" the mortgage business to meet customer demand, "which has decreased."

BoA is one of a number of large financial institutions that have made cuts in response to the dwindling refi market in recent months. But there is a bright side: Less business going to BOA allows the small to mid-sized mortgage companies to flourish in the thriving purchase market. Rates are still historically low with Freddie Mac's weekly survey last week reporting average rates on 30-year, fixed-rate mortgages at 5.64 percent – the lowest in six months. As a result of the low rates, U.S. new home sales unexpectedly rose in September to the third highest total on record, suggesting housing is helping spur the economy.

But things are looking up for those former BOA employees. At the end of last week the company announced its plan to open a new contact center in Rhode Island that will create 700 to 900 new jobs. Although slated to open in mid 2005, staffing for the new operations will begin immediately. Training will be conducted in phases beginning late this year, with the goal of full completion by mid-year.

"Our goal is to grow our business in Rhode Island and throughout New England, and today's announcement is just one example of how we're doing that," said Kenneth D. Lewis, CEO and President of Bank of America. "This collaboration is a model for how we can work together to create jobs and economic growth across the region."