NEW YORK Feb 21 Wells Fargo & Co. (WFC.N) said on Wednesday it is cutting 320 subprime mortgage jobs in two operations centers because it is tightening its lending standards to home buyers with poor credit histories.
About 250 jobs are being eliminated in Fort Mill, South Carolina, and 70 in Concord, California, according to a memo from Lynn Greenwood, a senior vice president of communications for the No. 5 U.S. bank's home and consumer finance group. Wells Fargo is the largest U.S. subprime mortgage lender,
"As a result of changing market conditions -- such as moderating house price appreciation -- effective Feb. 16 we tightened our credit policy for a portion of our nonprime lending business," Greenwood wrote. "This decision directly impacts our nonprime loan volume, which in turn impacts staffing levels in the areas devoted to managing these loans."
The cuts are the latest retrenchment in the subprime sector. Defaults are rising as flatter or falling home prices make it harder to refinance adjustable-rate mortgages whose rates reset higher.
San Francisco-based Wells Fargo said it will give consideration for affected workers who want to stay on.
Wells Fargo originated $66.8 billion of subprime mortgages from January to September 2006, compared with $40.3 billion by HSBC Holdings Plc's (HSBA.L) HBC.N HSBC Finance and $39.4 billion by New Century Financial Corp. NEW.N, according to National Mortgage News.
Wells Fargo said its totals include "co-issued" loans where investors such as investment banks assume all credit risk. The home mortgage unit is based in Des Moines, Iowa, and has more than 10,000 mortgage specialists, Wells Fargo said.
Meredith Whitney, an analyst at CIBC World Markets Inc., on Wednesday raised her Wells Fargo rating to "sector outperformer" from "sector performer."
"We take comfort in the fact that the majority of Wells Fargo's subprime loans were co-issued," while loans the bank holds "are held to solid underwriting standards," she wrote.
Wells Fargo shares rose 7 cents to $36.01 in morning trading on the New York Stock Exchange.
Shares of many subprime lenders fell after NovaStar Financial Inc. NFI.N on Tuesday posted a fourth-quarter loss, said it may realize no taxable income from 2007 to 2011, and said it may drop its tax-friendly real estate investment trust status.
((Reporting by Jonathan Stempel, editing by John Wallace; Reuters Messaging: firstname.lastname@example.org, 646 223 6317)) Keywords: WELLSFARGO MORTGAGES/JOBS
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