Bank of America Corp. plans to close its 1,200-job Getzville mortgage facility in the CrossPoint Business Park by May 31, but M&T Bank Corp. will take over the lease and hire at least 600 of the employees to service mortgages that a third-party investor bought from Bank of America, the two banks confirmed Monday.
Another 100 employees will remain with Bank of America at other area locations, leaving a net loss of 500 jobs, said Bank of America spokesman Dan Frahm.
The announcement is a blow to the Western New York job market.
“We will continue to work with other employers in the market, just as we did with M&T, to help other employees find other opportunities,” Frahm said.
Bank of America officials said the bank is shutting down its 13-year-old mortgage processing operation because it no longer has as many troubled borrowers who need help with their delinquent mortgages, said regional president Kevin Murphy.
Although that wasn’t the original purpose of the facility when it opened in January 2000, it has become its major focus since the mortgage meltdown and 2008 financial crisis. But the improving economy and the bank’s efforts over the last few years have cut the number of delinquent mortgage customers by more than half, reducing its need for the local operation.
M&T will assume control of the 130,000-square-foot facility immediately after Bank of America leaves. The lease runs until 2015.
M&T has been hired by the unidentified third-party to service several pools of securitized mortgages, both current and delinquent. Those loans, which are packaged into investments for sale on Wall Street, are owned by other investors, but Bank of America had been servicing them.
The third party bought those servicing rights, and subcontracted them to M&T, which in recent years has developed a strong reputation for servicing loans, especially those that are troubled.
M&T will now collect payments on the loans, process paperwork and statements, and handle other administrative functions on behalf of the third party.
M&T spokesman C. Michael Zabel would not identify the third party or characterize the size of the servicing contract, other than to call it “substantial.”
The bank needed to bring on a significant number of employees experienced in mortgage servicing.
“They need to grow their capability to service those customers,” Frahm said. “The employee base we have is highly skilled, highly experienced. They may not have been working on those particular loans, but they’re very skilled in mortgage servicing work.”
Zabel said M&T is planning “town hall” meetings with Bank of America employees soon, and will send informational material to set up the job application process.
The transition will occur gradually over the next few months.
Frahm said M&T has agreed to interview all current employees at the facility, and will credit those who are hired with their years of service. Salary levels also will be maintained, he said.
Murphy said the 500 people losing their jobs will be “offered other opportunities for positions within the bank,” but “if they can’t find anything, then ultimately, they’ll be eligible for severance and unemployment.”
Bank of America doesn’t have enough open positions locally for all of them. But officials also noted that their facility is located right next door to Citigroup’s Amherst facility for its corporate and investment bank. Citi is seeking to hire 175 people for a variety of jobs, although none of them are related to mortgage servicing. “The timing on this could be very, very fortunate,” Murphy said.
Additionally,the insurance company GEICO Corp., which is also located at CrossPoint, is hiring, and even expressed interest in an email in reaching out to Bank of America late Monday. And M&T has 329 other jobs open at the bank locally. “We are working closely together to help the employees at that facility,” Zabel said.
Bank of America employs about 2,000 people in Western New York, including the mortgage facility, 35 retail branches and a credit-card and consumer-loan collections facility in West Seneca that also underwrites small business loans. The other operations are unaffected.
The closing of the mortgage servicing center due to the improving economy has some irony. Many of the employees were hired when the economy was bad, loan losses were heavy and jobs were hard to find. Now, the improving economy and better employment conditions mean the jobs aren’t needed.