Countrywide Financial News - Layoffs

Big lay-offs as US housing crisis deepens
Eric DashSeptember 10, 2007
COUNTRYWIDE FINANCIAL, the largest mortgage lender in the US, said it would cut 12,000 jobs, which would be the biggest round of lay-offs in the troubled housing industry.

Countrywide, based in California, said on Friday as many as 20 per cent of its 60,000 workers could go over the next three months as it contends with a severe drop in new home loans, tighter lending conditions and a rise of borrower defaults and delinquencies.

Most of the lay-offs will be staff who approve and underwrite mortgages. Others will be in back-office operations. The banking, insurance and servicing divisions will be unaffected.

On Friday, IndyMac Bancorp, the second-biggest home lender, said it would be cutting about 1000 jobs, or 10 per cent of its workforce, over the next months. Two other lenders, National City Corporation and Lehman Brothers, also announced lay-offs, bringing the total to more than 15,000 job cuts.

The latest cuts are on top of nearly 31,000 lay-offs by financial services companies in August, said Challenger, Gray & Christmas, a recruiting firm in Chicago. About 86 per cent of those jobs came from the mortgage sector.

"Countrywide is following what a bunch of mortgage players are having to do," said Guy Cecala, the publisher of Inside Mortgage Finance. "It is not just downsizing to reflect the decline in current mortgage volumes, but it is downsizing to reflect the new realities of the mortgage market."

Countrywide had been riding high as one of the most aggressive lenders during the housing boom. Under Angelo Mozilo, its founder and chief executive, it became a $US500 billion ($600 billion) mortgage machine with nearly 900 offices across the nation.

But recently, Countrywide has been struggling. Defaults by homeowners are on the rise, especially for adjustable-rate loans to subprime borrowers, whose credit histories are blemished. Investor appetite for buying non-conventional mortgages in the secondary market, the foundation of Countrywide's business, has all but dried up.

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