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The Big Four Layoff Trickle Down Theory

Robert Ottone
Feb 21, 2014

We typically hear about the big four laying off workers by the thousands. It’s not unusual to see Wells Fargo kicking a bunch of the staffers of their mortgage department to the curb. JPMorgan? No big deal, they’ll just cut 13,000 jobs by 2015. Now, the layoffs in the mortgage industry have begun to affect the little guys, too. The Charlotte Observer published a piece highlighting the mix of big-four and smaller mortgage company layoffs, with the numbers being pretty high in the Charlotte alone. Citigroup, for example, is trimming its workforce by around 800 or 900 employees, which is more than half of its’ Charlotte-based workforce. Recently, a source connected to one of the big four banks confirmed that even commission-based sales positions in their mortgage division were being laid off left and right, including new hires. News hires brought on as recently as a couple months ago. It’s a somewhat alarming trend, seeing recently-hired talent kicked to the curb after only a month or two of work, not to mention; work based on commission. “The mortgage market is in a tough place right now because refinancing activity has fallen off very sharply over the last year, and purchase volume is still very slow to recover, reflecting the frustratingly slow recovery in the housing market,” Wells Fargo economist Mark Vitner told The Charlottle Observer. Mt. Laurel, N.J.-based PHH Mortgage also announced a round of layoffs, however; they didn’t indicate the exact number. The only silver lining here is that the affected parties would receive 90 days compensation and benefits, which is far better than many receive as part of their severance package. PHH Mortgage is in the process of constructing a $4 million office space in the area, which many speculated would result in increased hiring, but apparently, that’s not the case. St. Louis is also in the throes of firings. Nationstar, after holding a job fair to promote mortgage-industry jobs in 2012, planned to add 120 jobs in 2012, then added 300 in 2013. Now, Nationstar is firing 150 mortgage-division workers. Apparently Nationstar is listing “closing” as their reason for firing so many workers. Missouri is also getting slammed by Bank of America, who’s decided to cut 280 mortgage banking jobs in the state, which may seem like a drop in the bucket, however; keep in mind, these are 280 people out of work. While the rate of firings at smaller firms remains relatively low compared to the rate being let go at the big four banks, understand that smaller entities have smaller staff, which results in a greater impact, not only to the company itself, but also to the staff of that company. Loss of wages isn’t the only negative impact when it comes to layoffs, there’s also a ding to morale as workers begin to wonder: Am I next?
Published
Feb 21, 2014
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