FHFA's Streamlined Modification Initiative Results in Mass Layoffs
In the wake of the FHA simplifying the loan modification process, over 20,000 JPMorgan Chase employees are in the process of being laid off. This confusing news comes not long after the industry posted its best results since 2006, and, according to Bloomberg, posted three straight years of profit for the company. The total number of employees on the chopping block amount to around two percent of the company’s workforce, however; it remains to be seen whether or not more employees will be let go or not.
“The Streamlined Modification Initiative adds to the suite of home retention tools offered by Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward DeMarco. “This new option gives delinquent borrowers another path to avoid foreclosure. We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”
Over the past five years, data collected by Bloomberg indicates that around 320,000 industry jobs have been cut. While news of people losing their jobs is always a horrible occurrence, the silver lining here is that by eliminating the need for those being fired, it signals that the housing market and mortgage markets are turning around. “It will be very modest growth, but growth nonetheless,” Mark Zandi, chief U.S economist at Moody’s Analytics Inc. told Bloomberg. “We have another three years of adjustment before we see significant growth.”
While many are out of jobs, banks will be looking to bolster their compliance, regulatory and risk management departments, effectively adding employees in most cases. Global stocks appear to be hovering around all-time highs, however; banks and agencies continue to work within the boundaries of new governmental rules and regulations.
“Fallout from the crisis is finally starting to go away,” said Gerard Cassidy, a bank analyst at RBC Capital Markets, to Bloomberg. “But in the end, there will be fewer people working in the banking industry.”
Sen. Chuck Schumer (D-NY) plans to aid those who worked for JPMorgan Chase out of their Albion, N.Y. call center. Schumer serves on the Senate Banking Committee, has apparently had discussions with JPMorgan Chase’s CEO, Jamie Dimon, regarding jobs for those laid off. “He sounded quite positive, but he will have an answer for me in a day or two,” Schumer told The Buffalo News. “But I am optimistic that we can actually make lemonade out of this lemon, by getting the vast majority of people employed.”
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