The Bank of America Corporation (BAC - Free Report) issued layoff notices to 540 Charlotte employees. The job cut has been in the Legacy Asset Servicing division and it will impact 60% employees of that division in Charlotte.
Notably, the bank had set up this division in 2011 to tackle delinquent mortgages mainly inherited through the 2008 acquisition of sub-prime mortgage lender Countrywide Financial. But with discernible signs of housing market recovery in recent times, Bank of America has started shrinking this division.
In fact, Bank of America had already reduced jobs at its troubled-mortgage units in cities such as New York, California, Dallas and California. However, this time hometown got the axe. Nevertheless, the retrenched workers will receive severance and other assistances, which include applying for a limited number of other positions in the bank in Charlotte.
In 2012, Bank of America employed 42,000 full-time workers in the Legacy Asset Servicing division. The bank however slashed a third of those jobs as it has been able to lower down the number of delinquent loans through a string of measures such as short sales, mortgage modifications, foreclosures and wholesale loan sales. In first-quarter 2014, Bank of America has reduced the number of mortgages that were delinquent by 60 days or more to just 277,000 from a peak of 1.4 million.
Other banks too have followed the same strategy. Last year, Citigroup Inc. (C) eliminated 150 jobs in Fort Mill, S.C., in the division of mortgage loss mitigation. Similar measures have been resorted to by JPMorgan Chase & Co. (JPM - Free Report) .
Currently, Bank of America carries a Zacks Rank #4 (Sell). A better-ranked major regional bank is KeyCorp. (KEY - Free Report) , holding a Zacks Rank #2 (Buy).