Wells Fargo to Cut More than 200 Jobs as HARP Demand Falls

February 14, 2011 No Comments »


Wells Fargo plans to cut between 200 and 300 jobs as a result of rising interest rates and a subsequent drop in demand for the government’s Home Affordable Refinance Program.

The loan program, also known as HARP, is designed to help underwater borrowers (those who owe more on their mortgage than their home is currently worth) refinance to take advantage of the low mortgage rates on offer.

It allows borrowers to snag the low rates even if they have negative equity up to 125 percent loan-to-value, something that would certainly prove a roadblock via traditional mortgage underwriting.

But mortgage rates have spiked in the past few months, with the popular 30-year fixed mortgage rising from 4.17 percent in November to 5.05 percent last week, per Freddie Mac data.

As a result, Wells is reportedly shutting down the HARP unit at the company’s St. Louis office.

According to one loan processor, they simply weren’t getting the applications necessary to justify staying operational.

HARP is one component of the Making Home Affordable initiative, which also includes the Home Affordable Modification Program (HAMP), a loan modification program for homeowners struggling to keep up with mortgage payments.

The refinance program had been scheduled to expire on June 10, 2010, but was extended until June 30, 2011 – HAMP is expected to run until December 31, 2012, though demand for that program is also waning.

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