The real estate market has always been a tricky market, with results constantly rising and falling from month to month. Now, however, the numbers in the real estate market are causing banks to have to downsize in order to keep up.
In recent years the real estate market, though not perfect, was just well enough to keep businesses going. Interest rates and asking prices were at a medium standpoint in comparison to the previous years. Now interest rates and asking prices are at a much higher rate in the year 2013 and fewer people are entering the market.
These problems with the real estate market are now effecting the workforce as banks are laying off high numbers of employees in their mortgage departments.
In major news, Wells Fargo mortgage department is perhaps the largest culprit now contributing to unemployment. Wells Fargo announced last Wednesday their plan to cut thousands of employees in the mortgage department. Hundreds of those employees have already been laid off just in the last few days. According to sources, the cuts to date have included 569 jobs in Twin Cities, 40 in Colorado Springs, 111 in Tempe, AZ, and 44 in Nebraska, and that is just the beginning. These lay-offs will continue to take place over time until the Wells Fargo bank feels like they can recover from the loss of numbers in the mortgage department
While Wells Fargo is currently making the largest cuts from their mortgage department other banks are also making plans to make some cuts from the banks, as well. In September of this year Citi bank announced their plans to lay off over 2,200 employees in the mortgage department. SunTrust banks announced the need to make cuts from their mortgage department, as well.
Even small town banks are announcing cuts. Mortgage Investors Corp in Florida laid off 500 employees and stopped making new loans.
The effect of the real estate market is taking place in states across the nation. The employee cuts at the bank’s mortgage departments have been overwhelming, and many local newspapers have reported on the effects that these employment cuts have had.
These layoffs are a result of economic turmoil in the real estate market causing interest rates to be too high. Last week Wells Fargo stated that their third quarter mortgage volume was down a whopping 42% from last year. This loss of business is now resulting in the demand for cuts in the mortgage department.
One bank is also expected to cause problems for bank employees but not as a result of the rise in real estate market prices but as a result of their own mortgage dealings. JPMorgan is another bank that is predicted to see possible employee cuts and perhaps in more than just the mortgage department. JPMorgan is accused of being misleading about the quality of mortgage-backed securities and are now paying billions of dollars worth in lawsuits. While they are being forced to pay $4 billion to struggling home owners it is only a small help to home owners and the real estate market in general.
Full consequences of the downsize in bank employees have yet to be seen but sources have no doubt that the problems in the real estate market will make a major contribution to the unemployment rate. Many are still left wondering just how many employee lay-offs it will take for banks to recover from the down market and many continue to fear for their jobs.
Written by: Crystal Boulware