At the first sign of sequestration, JPMorgan Chase & Co. announced they will drop 19,000 people from its mortgage and community banking units, reported Bloomberg Businessweek.
The biggest bank in the United States employed 259,000 people since December and specifically is looking to reduce 7.3 percent of their headcount through 2014. That translates to cutting 13,000 to 15,000 jobs from the mortgage business and 3,000 to 4,000 from the community banking business, which will not include the home lending transactions, according to the bank's Chief Executive Officer Jamie Dimon.
The bank has seen record earnings in the past three years from mortgages, but since more competition is expected from loan interest rates at an all-time low, Dimon is focused on reducing expenses.
The announcement came at their annual Investor Day conference and they hope to add employees to other units while they make the cuts, according to Kristin Lemkau, spokeswoman for the firm.
In an interview with Businessweek, Chief Financial Officer Marianne Lake said, JPMorgan forecasts the reductions to reach $1 billion this year alone.
"We know the work we have to do, and we're comfortable doing it," Lake told Businessweek.
Community banking expenses are expected to rise 3 percent in 2013 and 2 percent in 2014, while the mortgage expenses related to current ongoing federal investigations and borrower relief, will be reduced $3 billion through 2014.
Among the programs that are in jeopardy from mortgage cuts are the relief for home-loan modifications. According to Bloomberg, JPMorgan already eliminated 800 employees working on foreclosure transactions.
However, according to Guy Cecala, publisher at Maryland-based Inside Mortgage Finance, most of the job posts being cut are from customer services. HSH.com's vice president, Keith Gumbinger added that it can translate to declines in refinancing processes because of smaller staff size.
As mortgage rates increase, "it's a pretty good bet that the refi boom will be coming to an end," Gumbinger told Businessweek. "Add regulations on top of that, and it doesn't get any better."
