Wells Fargo to cut 500 jobs in subprime division

SAN FRANCISCO — Wells Fargo & Co. is eliminating more than 500 jobs in a division that makes home loans to high-risk borrowers, adding to the economic distress caused by the decaying subprime mortgage market.

Most of the cutbacks, concentrated in South Carolina, Arizona and California, stem from Wells Fargo’s recent decision to make it more difficult for borrowers with blemished credit records to qualify for subprime mortgages.

The tougher lending standards means Wells Fargo will be handling fewer subprime mortgages, reducing the need for as much staffing, according to a statement issued late Monday by the San Francisco-based bank.

Most of the 514 affected workers received layoff notices last month and will leave Wells Fargo next month unless the bank can find them new jobs. About 70 jobs in Tempe, Ariz. were cut earlier this year.

Wells Fargo spokeswoman Debora Blume declined to specify how many employees work in the bank’s subprime mortgage unit, or what type of jobs would be cut. The bank employs about 158,000 workers through all its operations.

Several other subprime mortgage lenders, including the corporate parent of Ameriquest Mortgage Co., also have been trimming their staffs.

Wells Fargo ranks among the nation’s largest subprime mortgage lenders, but so far has been able to avoid major losses.

More than two dozen subprime lenders have either closed or gone bankrupt since late last year.