National City Corp. will cut 900 jobs as it exits the wholesale mortgage lending business, the bank said today, but will continue to originate home loans directly to consumers through retail offices in 50 states and bank branch offices in nine states.
Cleveland, Ohio-based National City said the job cuts at National City Mortgage were being made in conjunction with a 49 percent reduction in the bank’s quarterly dividend as the company braces for mounting losses on mortgage loans.
In a Nov. 30 regulatory filing, the bank said it expected fourth-quarter loan loss provisions to hit $700 million. Loans with “elevated risk” included broker-originated home equity loans and run-off portfolios of National City’s former subprime lending division, First Franklin.
National City Corp. retained $7.3 billion in loans originated by First Franklin when it sold the subprime originator to Merrill Lynch & Co. for $1.3 billion at the end of 2006.
Since August, National City said it has reduced staffing in mortgage operations by 1,700 positions, exited all broker-based mortgage lending, and eliminated or restricted loans not eligible for purchase by Fannie Mae and Freddie Mac. Companywide, National City said it cut 3,400 jobs in 2007.
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