IndyMac Cuts 24 Percent of Staff, Closes Wholesale Mortgage Centers

January 15, 2008 No Comments »

A number of sources have told me that IndyMac Bancorp is set to cut a substantial number of jobs today.

It’s long been known that the struggling mortgage lender was reducing its headcount by offering employees voluntary severance packages, but now it appears the company must involuntarily trim its workforce.

Sources also say some of the smaller and lowest producing operations centers nationwide will be shut, though it is believed that those slated to close were already depleted from the voluntary severance package offers.

I’ve been told that a good number of employees accepted the compensation packages, making the forthcoming job cuts somewhat less significant.

The supposed staff reductions are likely in line with the Pasadena, CA-based lender’s retail push and subsequent wholesale phase-out.

Last week, the company said its wholesale channel saw production of $2.4 billion in November, down a sizable 20% from last year.

Conversely, The Retail Lending Group produced $345 million, a 17% jump from October and a huge increase from the $9 million produced in November 2006.

Shares of IndyMac were down 28 cents, or 5.88%, to $4.48 in early afternoon trading on Wall Street.

The company’s stock, which traded as high as $42.55 during the past year, has been battered by the mortgage crisis, dipping as low as $3.95 last week.

Update: IndyMac cut its workforce by 24%, resulting in 2,403 layoffs.

“When I discussed the results of the voluntary resignation and severance program in an email to all of you on October 12, I stated, “I believe that we are largely done with staff reductions at this time except for some small, targeted layoffs over the next 30 days … unless, of course, the mortgage market takes another turn for the worse,” CEO Mike Perry said in a memo to employees, posted on TheIMBreport.com.

“The reality is that since October 12 conditions have gotten worse in our industry. The private secondary market remains virtually frozen, and the market suffered another setback in November, as the GSEs reported large losses and indicated that they are capital-constrained, with the result that they had to further tighten their own guidelines,” Perry continued.

“Of the 2,403 impacted individuals, 1,881 are being impacted immediately, including 1,440 regular employees and 441 from our global/non-traditional workforce. 470 are sales staff who we anticipate will not be able to succeed and earn sufficient commission-based income and will therefore leave Indymac by March 31, and the remaining 52 are individuals who have voluntarily resigned since January 1,” he added.

“Of the 1,440 regular employees impacted immediately, we offered a voluntary resignation and severance program to the sales staff in the Mortgage Professionals Group, to whom we had not offered this option last September. 366 sales staff, who were generally those performing in the bottom third and realized they would have a hard time making a living in the current market, opted for this program. “

“Unfortunately, I don’t think this process is entirely finished at Indymac, and I anticipate further cutbacks in the range of 500 to 1,000 of our global workforce primarily throughout the first half of this year,” he concluded.

Despite reducing its headcount by about 1,600 employees in 2007 via layoffs, severance packages, and reductions in outsourced and temporary workers, the company ended the year with a workforce of 9,938, up from 8,775 at the end of 2006, thanks to its retail push.

IndyMac also confirmed that it had closed several regional wholesale mortgage centers, including one in Kansas City, and others in Tampa Bay, Philadelphia, Boston, and Columbia.

The layoffs included a 27% reduction in staff with outsourced and temporary vendors, mainly in India.

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