Major US mortgage firm cuts jobs
Countrywide, the largest US mortgage lender, is cutting 20 per cent of its workforce over the next three months as the US housing crisis worsens.
The axing of 12,000 jobs, announced on Friday, is the biggest job reduction by a single company and was blamed on declining mortgage demand.
The company says mortgage volume is expected to decline by 25 per cent in 2008.
The cuts follow the elimination of about 900 positions earlier in the week and 500 last month.
Angelo Mozilo, Countrywide’s chief executive and co-founder, said in a letter to employees: “This current cycle is certainly the most severe in the contemporary history of our industry.”
Countrywide announced the cuts hours after the labour department said US non-farm payrolls fell by 4,000 in August, the first drop in four years.
The unexpected decline prompted calls for the Federal Reserve to cut interest rates before credit market turmoil drives the economy into recession.
In response to the changed market, Countrywide plans by the end of this month to move most of its residential loan business into Countrywide Bank, so it can tap more funding sources.
It is also restricting loans to those that can be sold in the secondary market, or that qualify under its bank’s criteria. Few will be subprime, which go to people with poor credit.
Mozilo also said: “During the past two years the growth in home price appreciation has stopped dead in its tracks.
“There have also been significant increases in delinquencies and foreclosures among far too many borrowers. More recently the secondary market for jumbo and non-agency conforming loans has become nearly illiquid.”
Countrywide executives were unavailable for interviews.
The US mortgage industry has lost well over 50,000 jobs this year.
Read the full article at Al-Jazeera
