Countrywide slashes 500 jobs

0 Comments | Oakland Tribune, Aug 21, 2007 | by Associated Press

LOS ANGELES -- Countrywide Financial Corp., the nation's largest mortgage lender, said Monday it had eliminated about 500 jobs as it tries to ride out problems from a credit crunch that has rocked the home loan industry.

The company said the cuts came in the subprime lending unit of its Wholesale Lending Division and its Full Spectrum Lending unit, which handles mortgages given to customers with minor credit problems or who can't provide full income documentation required for traditional prime loans.

"Approximately 500 positions have been eliminated across the country. The company will monitor market changes and production levels on an ongoing basis and respond as appropriate," Countrywide said.

Countrywide employs more than 60,000 people. The Calabasas-based company also tried to reassure its banking customers that their money was safe. Countrywide ran full-page ads in U.S. newspapers in which it asserted "the future is bright" at Countrywide Bank FSB.

The ads noted the bank has more than $100 billion in assets, investment-grade ratings from three major credit agencies, and that the credit woes rocking its mortgage lending business don't affect federally insured deposits.

It's a message Countrywide has tried to get across since last week, when a Wall Street analyst suggested the company could end up in bankruptcy if the liquidity crunch sparked by rising mortgage defaults worsens.

"For the next several weeks, months -- whatever it takes -- we're going to try to reassure folks that we're growing and we're a solid company," Countrywide Financial spokesman Daniel Weidman said.

Countrywide said last Thursday it had borrowed $11.5 billion so it could keep making home loans.

The developments left many Countrywide Bank customers frazzled over the security of their deposits. Many have converged on bank branches in search of answers.

The lobby of a branch in West Los Angeles was packed Monday with nervous people waiting to speak with bank officers to make sure their assets were safe.

"It is worse for people who are senior citizens," said customer Ruben Krakauer, 68. "If something should go wrong ... they don't have enough time to make up for their losses. How many people would hire me?"

Some customers came away feeling confident about leaving their money at Countrywide Bank.

"Everything I've got is federally insured," said Jim Maurer, 59. "I don't think there's going to be any problem with Countrywide."

Examiners from the Office of Thrift Supervision, the main federal regulator of thrifts, have been on site consistently at Countrywide's corporate offices since its bank converted to a thrift charter in March, said Bill Ruberry, a spokesman for the agency.

He said that was common practice by the agency regarding large institutions, whether the thrifts are new or have been operating for a long time.

His office is "monitoring its situation with Countrywide very closely," Ruberry said.

Countrywide shares fell $1.62, or more than 7 percent, to $19.81 Monday after rising 13 percent on Friday.

The shares have traded in a 52-week range of $15 to $45.26.

Countrywide is the largest mortgage lender by volume, accounting for more than 13 percent of the loan servicing market as of June 30, according to the mortgage industry publication Inside Mortgage Finance.

The mortgage lending industry has been grappling with a spike in mortgage defaults and foreclosures as the housing market has cooled.

Many homebuyers have been forced into default or foreclosure because they haven't been able to sell their homes or end up owing more than their home is worth.

Like other lenders, Countrywide has also tightened its credit guidelines and stopped selling some types of adjustable rate loans.