WORCESTER—Commerce Bank & Trust Co. has largely suspended operations of its home mortgage subsidiary, 1-800-East-West Mortgage Co., and laid off about half the subsidiary’s work force because of declining business.
As interest rates rose in recent months, fewer consumers have been seeking mortgages, particularly refinancing of existing mortgages, Brian W. Thompson, president and chief executive of Commerce, said this morning. Bank directors will consider options for the subsidiary, he said.
“As rates rose, a number of people just went to the sidelines,” Mr. Thompson said. The market, he added, “went into a drought.”
Commerce Bank acquired East-West in 2000, just before the nation’s housing bubble expanded. East-West handled all home mortgage lending for Commerce, while the bank focused on commercial lending to small businesses in Central Massachusetts.
East-West typically generated about $400 million to $500 million a year in mortgages and then sold them, according to Mr. Thompson.
Commerce had assets of about $1.76 billion as of June 30, according to a report on file with the Federal Deposit Insurance Corp., including about $1 billion in loans. That loan portfolio did not include East-West mortgages.
The Marlboro operation employed less than 25 people, Mr. Thompson said, and about half of those workers have been laid off. Other workers continue to process mortgage applications already received, work that may take another month to two months, he said.
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