About 700 jobs in Thousand Oaks and Westlake Village are in peril as Bank of America prepares to sell or shutter the correspondent-lending arm of its mortgage business.
“We intend to sell the correspondent mortgage lending division or, if a suitable deal is not identified, we will consider other options, including winding down the correspondent lending business in an orderly manner,” Bank of America spokesman Rick Simon said in a statement emailed to the Business Times on Sept. 1. “At this time, our correspondent lending operations continue business as usual.”
Simon said talks of potential layoffs are “premature,” but that if a sale occurs, it will be “managed with a focus on minimizing impact to clients and associates.”
The potential jobs cuts come as the beleaguered bank, the successor to Calabasas-based Countrywide Financial Corp., tries to stem massive losses on home loans and focus on core operations.
Simon said the firm does not break employee numbers down by location but that the correspondent lending division employs about 1,200 people total. The Los Angeles Times reported that the correspondent unit — which deals with home loans originated by third-party firms — employs about 450 people in Westlake Village and 250 in Thousand Oaks.
“While some of the division’s upper management is housed in Thousand Oaks, the associates are widely spread across the country,” Simon told the Business Times.
Not counting its home loan branches, Bank of America has offices in one building in Thousand Oaks and two in Westlake Village, as well as a larger campus in Simi Valley, he said.
“Correspondent lending has a relatively small footprint compared to the overall associate population in Ventura County,” Simon said.
Bank of America has declined repeated Business Times requests over the last two years for its Ventura County employee count, but as of 2009 the firm employed about 3,800 people in the county. If the count has stayed in that range, Bank of America remains Ventura County’s second-largest private employer.
Bank of America’s mortgage business had a $14.5 billion loss in the second quarter, as investors demanded the firm buy back soured loans.
Correspondent loans are typically originated by third-party firms, which then sell them to larger lenders, such as Bank of America. According to regulatory filings, correspondent loans accounted for 27 percent of Bank of America’s outstanding claims as of June 30.
Typically, if such loans sour, buyers can ask originators to repurchase the debt. But because many of the correspondent firms that had sold loans to Bank of America during the housing boom are no longer in business, the company is unable to recover those funds, it said in regulatory filings.
Bank of America also said in August that changing capital rules were pushing it to take on fewer new contracts to oversee outstanding debt, a key part of the correspondent mortgage business.
Correspondent originations accounted for $21.8 billion, or 54 percent, of the bank’s mortgage lending in the second quarter of 2011, a company spokesman told Bloomberg News last month. This compared to $27.4 billion, or 46 percent, in the first quarter, he said.
Bank of America CEO Brian Moynihan said in an internal memo last month that the firm plans to slash 3,500 jobs company-wide during the third quarter as it attempts to cut costs and refocus the nation’s largest retail bank.
The company has struggled through the financial crisis, and has been dealing with fallout from its 2008 acquisition of Calabasas-based Countrywide Financial Corp., a deal which included the mortgage-processing facilities in Ventura County.
Bank of America has booked about $30 billion in housing-related charges since Moynihan took the helm in early 2010, Bloomberg News reported. Most of those charges were related to the Countrywide takeover.
– Bloomberg News contributed reporting to this article.