First Horizon Home Loans will cut its mortgage sales force in half, reduce support staff, and close “underperforming” mortgage branches, its parent company said Wednesday, as part of a plan to eliminate at least 1,500 jobs companywide by early next year.
In a press release, First Horizon National Corp. said it would shrink the real estate portfolios on its balance sheets by cutting originations, and cut back on back-office support staff as it throttles back consumer and construction lending production.
Memphis, Tenn.-based First Horizon — which announced in July that it would sell, close or consolidate First Horizon Bank branches in the Atlanta, Baltimore, Dallas and Northern Virginia markets — employs 11,000 workers at FTN Financial, First Horizon and First Tennessee offices in more than 40 states.
In the company’s latest quarterly report to investors, First Horizon said it lost $27.4 million in mortgage banking during the first six months of the year, compared with income of $24.7 million in the same period of 2006. Total mortgage banking revenues for the first half of 2007 were down 24 percent, to $193.4 million, with fees from origination decreasing $43 million and net servicing income down $10.5 million, First Horizon said.
For the quarter, net origination income declined 39 percent to $67.3 million from the same quarter a year ago, as loans delivered into the secondary market were flat at $7.4 billion and the margin on deliveries decreased from 126 basis points in 2006 to 76 basis points. Total mortgage servicing fees fell 8 percent to $73.9 million, reflecting changes in pooling and servicing agreements for private securitizations. The agreements were modified to separate master servicing from retained yield, the company said.
As of June 30, First Horizon Home Loans had sold mortgages with outstanding balances of $110.5 billion under full recourse agreements, requiring the company to repurchase the loans if they were to go into default. The company was also servicing $106 billion in loans, many of which were held by Ginnie Mae, Fannie Mae, Freddie Mac, or private investors.
Other lenders that have announced job cuts in recent weeks include Option One (575 positions), Countrywide Financial (10,000 to 12,000 jobs), IndyMac Bancorp Inc. (1,000 workers), National City Corp. (1,300 jobs), and Lehman Brothers (850).