The Other Side of Mortgage Finance Improvement

Financial institutions are considered by many in the money market and financial sector as the frontline. These organizations are responsible for money management, while at the same time tend to the customer base directly. In addition, these financial institutions create stable employment in many communities across the country. Recently, Bank of America Home Loans, a subsidiary of the Bank of America Corporation (BAC) underwent changes. These changes are discussed in the attached article (Raice & Steinberg, 2013). “The slowdown in mortgage-refinancing activity is hitting towns across the U.S. as banks eliminate thousands of jobs to cope with declines in home lending” (Raice & Steinburg). Even with the bailouts from the mortgage crisis, as a result of this slowdown, “Bank of America Corp cut about 1,200 mortgage jobs on Thursday and is aiming to cut another 2,800 such jobs in the fourth quarter” (Raice & Steinberg.). These cuts have had a huge impact on the lives of many, who are at the bottom of these cuts.

This slowdown is not just impacted Bank of America, many other financial institutions are looking at their human resources to see where cuts can be made. Two other financial institutions (Wells Fargo and Citigroup) in response also made significant cuts to their staff. As stated early, these financial institutions are the front line, and many of them are considered solid employment in many communities across America. During this economic downturn, the impact of these layoffs has a tremendous impact on these communities. For example “Danville, Ill., has seen both the boom and bust in mortgage jobs. The small town on the eastern edge of the state benefited from the presence of a Citigroup mortgage-processing center that opened in January 2012 as it attempted to transition away from its industrial roots. But Citigroup closed its Danville office in July, leaving people like Atlanta Kegley out of work. Ms. Kegley, 23 years old, was hired in August of last year to refinance mortgages” (Raice & Steinberg). Ms. Kegley who is a “single mother, monthly gross pay has been reduced from 3,500 per month to living off of 500 a month unemployment” (Raice & Steinberg). Ms. Kegley served an operational role, but due to the decline in the refinancing, there has not been much need for these positions. One director states that “he doesn't expect to see banks to do much hiring of "operational" roles such as underwriters, loan processors and loan closers through at least the first quarter of next year” (Raice & Steinberg). This may be a sign that the economy is improving.

To conclude it is evident that many financial institutions are laying off employees by the thousands in certain operational jobs like loan refinancing, underwriting, etc. This may be a clear indication of a recovery in the national economy. However, the downside is that many people are losing their jobs in communities across America. "It's like giving someone the lottery then it being ripped away…I know the market is rebuilding but it's hard for the people who were originally selling those mortgages” (Raice & Steinberg).

Work Cited

Raice, Shayndi and Steinberg, Julie: Mortgage Declines Spread Pain.” The Wall Street Journal, 24 Oct 2013. Web. 29 November 2013.