Full Spectrum Lending Shrinking Fast

September 21, 2007 No Comments »

Countrywide’s subprime lending unit Full Spectrum Lending appears to be in a phase-out stage, with many branches reported closed in recent days and weeks.

If it’s any sign that things are going south at FSL, recruiters for the unit have apparently been laid off.

It’s also been rumored that several FSL branches have closed in recent days, including locations in Lexington, Nashville, Cincinnati, and many others.

A San Antonio news outlet reported one local closure, saying, “Countrywide Financial Corporation has shuttered its San Antonio office that specialized in subprime lending.”

“The Countrywide Full Spectrum Lending office on Interstate 10 closed Wednesday, and, according to a voice recording, any pending loans will be served by the Austin office.”

According to sources I spoke with, these branches were shut down entirely, and phones were re-routed to other nearby branches.

The news isn’t mega surprising, as company chief Angelo Mozilo recently said, “We are out of the subprime business” at a Bank of America investment conference in San Francisco.

“The only subprime loans that Countrywide will originate will be GSE-eligible, period.”

That means loans that can be sold to Fannie and Freddie are the only “subprime” quality loans the company will continue to originate, which can’t be much.

In a recent press release, Countrywide said, “In 2006, subprime loans comprised of only approximately 9% of Countrywide’s entire loan originations. For the month of July 2007, this percentage has decreased to less than 5%.”

One ex-employee noted that the Full Spectrum Lending closures weren’t due to a lack of production, but rather because the mortgage lender was finished with subprime lending.

Earlier this month, significant Countrywide layoffs were reported, to the tune of 10,000-12,000 by year-end, with many analysts expecting numbers as high as 20,000.

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