Countrywide cutting up to 12,000 jobs

first_img The massive layoffs, which equal 20 percent of Countrywide’s nationwide workforce, raise concern whether the company will survive the mortgage market meltdown. “They are trying to get out in front of this and that means there is pain near term. But they might survive. Certainly Bank of America thinks so,” Sidhu added. Countrywide has already tapped an $11.5 billion line of credit and received a $2.5 billion cash infusion from Bank of America. “The news keeps getting worse,” analyst Douglas A. McIntyre wrote Friday afternoon on the blog 24/7 Wall St. The job cuts will come over the next three months and the company said that the eventual total could drop if the interest rate environment and related market volume outlook improve. CALABASAS – Countrywide Financial Corp. said Friday it would slash up to 12,000 jobs nationwide as it struggles to remain a viable business in the home loan crisis. It’s the second round of cuts this week for the nation’s biggest mortgage lender, which is based in Calabasas. Earlier they eliminated 900 jobs and another 500 last month. It is unknown how many local jobs will be lost. The company said that cuts are essential because it expects 25 percent fewer new mortgages in 2008 compared to this year’s already weak level. “They are taking the right action and the right action is estimate how bad you think it can be and then reduce costs,” said Nancy Sidhu, senior economist at the Los Angeles County Economic Development Corp. “We are taking decisive action to ensure that Countrywide continues to be well-positioned for further success,” Angelo Mozilo, the company’s chairman and chief executive officer said in a statement. He also said that the company’s focus is to remain an industry leader in the U.S. residential lending business. “While workforce reductions are therefore always very difficult, these decisions are being made with the utmost attention and sensitivity to the impact they will have on our company and our people,” company president and chief operating officer David Sambol said in a statement. The company said its strategy also includes: Continuing to move the residential lending business into its federally chartered thrift entity, Countrywide Bank FSB. This is expected to enhance and strengthen the business model by delivering greater and more stable liquidity, reduced borrowing costs and greater operational efficiencies, the company said. This should be completed by month’s end. It’s an important move because the bank can access funding from the Federal Home Loan Bank Board. At the end of June Countrywide was among the federal bank’s top 10 borrowers, Sidhu said. Revising product guidelines to ensure that all loans the company makes can be sold into the secondary market or are high quality prime loans to be held in Countrywide Bank’s investment portfolio. The company recently decided not to make any more subprime loans except those that meet Fannie Mae, Freddie Mac or the Federal Housing Administration guidelines. Countrywide will also focus on growing its residential and commercial loan investment portfolio and expanding its financial center. Countrywide’s insurance segment will continue to grow. But the company’s troubles could also grow before they ease, too. For example, Countrywide is having to hold in its own portfolio some of the loans it made and Sidhu said that’s a transitional issue going forward. “The only kinds of mortgages it’s going to be able to sell near term are the prime conforming mortgages until the credit markets loosen up,” she said. “And it’s not clear when that will be.” [email protected] (818) 713-3743160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img