Countrywide to Cut Up to 12,000 Jobs

September 7, 2007 No Comments »

Just saw this on CNBC; apparently the Wall St. Journal is reporting that Countrywide plans to cut 10,000 to 12,000 jobs in the next three months, or roughly 20% of its workforce, though the layoffs could be reduced if the market improves.

But that’s unlikely, and many analysts believe the number of layoffs could be as high as 20,000 when it’s all said and done.

Not a big surprise, as I already reported the reality of the Countrywide layoffs two days ago.

The mortgage lender is apparently working to cut costs rapidly as it continues to hold onto a slew of non-marketable loans.

The WSJ is reporting that the largest U.S. home-mortgage lender is predicting a 25% drop in loan origination in 2008.

Again those are the company’s estimates, and many analysts are predicting a 40% drop.

The lender is also switching its focus to government-backed loans such as FHA loans and conforming loans because there is absolutely no secondary mortgage market at this point.

In a statement, Countrywide said it would no longer originate any subprime loans that couldn’t be sold via Fannie Mae, Freddie Mac or the FHA.

From separate sources I’m hearing that the company’s subprime division Full Sprectrum Lending is all but finished, and that some employees in these departments were already released over the last two weeks.

One alleged Countrywide employee has called it “a waiting game for all of us in FSL.”

While another said, “My FSL branch is slated to close within two weeks, though we aren’t supposed to know.”

And other sources tell me that the layoffs will be executed in batches of 1,000 per week because the Peoplesoft system can’t process more than that number.

An ex-Countrywide employee e-mailed me today, informing me that she had worked at Countrywide for six years, but only received a two week severance and was instructed to look for a job at the “CountrywideCareers” website.

She noted that every department except loan administration in California and Texas were on hiring freezes.

She also told me that employees with the company less than 12 months would receive one week of base pay for severance, and employees with the company longer than 12 months would receive two weeks base pay.

I’ve heard of mass layoffs at some of the facilities, and also single layoffs where employees would show up and be told not to log-in, whereby they would be notified of the bad news.

I’ve been told that Countrywide employees received a memo regarding the layoffs before it was reported by the WSJ.

The news was accompanied by a statement to Countrywide employees from CEO Mozilo, in which he slammed the media, accusing the New York Times and other news outfits of misreporting the current situation.

Mozilo attributed the current mess to the cyclic nature of the mortgage industry, highlighting the fact that many of the recent refinances executed by his company were helping borrowers out of subprime loans, and ended the statement saying he remained bullish on the future.

In regard to layoffs, he said divisions likely to be affected by the layoffs included “production divisions, and the general and administrative support areas of the Company.”

Areas that he felt wouldn’t be affected include loan servicing, insurance businesses, and banking operations.

Yesterday in a regional Wells Fargo employee meeting company officials spoke of the deteriorating Countrywide situation, noting that the company had made so many bad loans that it was scrambling to fix itself.

To add insult to injury, Fitch affirmed $10.4MM and downgraded $544.8MM from two Countrywide second mortgage transactions, with many falling below investment grade.

More to come.

In the mean time, check out the latest list of closed lenders, mortgage layoffs and mergers.

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