National City Corp. said today that it is laying off 1,300 employees in an effort to reduce the size of its decaying mortgage unit amid weakened demand.
The lender said business had dropped significantly in the past six weeks, and that the company would cut back on originating loans that it couldn’t sell to Fannie and Freddie.
The company is also considering keeping some loans on its book as opposed to selling them because of poor marketability on the secondary mortgage market.
The news is another big blow for mortgage brokers, who are finding themselves being squeezed out of the market as more mortgage lenders go retail.
The company is also undergoing structural changes, opting to merge its mortgage unit and home equity unit into one.
Earlier this week I reported National City layoffs had taken place over the last three weeks, and that as many as 13 branches would be shut in California alone.
I’ve been told that they closed their Sherman Oaks, CA office and consolidated it with their office in San Diego, CA.
The cost of the cutbacks and the shifting of business will cost roughly $200 million before taxes.
National City shares were trading down roughly 2.5%, at $26.69 in midday trading.