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E-Loan Layoffs Claim 513 Jobs

According to a recent SEC filing, E-Loan, the consumer loan division of Banco Popular, plans to cut 513 jobs as part of a massive restructuring effort in response to current market conditions, losses in the unit, and other undisclosed factors.

Last week, the Board of Directors adopted a Restructuring Plan aimed at cutting losses within the unit while shifting focus towards “the origination of first mortgage loans that are actually being sold to Government Sponsored Entities (GSEs).

“The cost-control plan initiative at the E-LOAN subsidiary will result in the elimination of approximately 513 positions out of a total of 771 and will be substantially accomplished in the fourth quarter of 2007.”

The bulk of the 513 affected E-Loan employees were informed of the decision last Thursday at headquarters in Pleasanton, CA via a prepared statement read by President Mark Lefanowicz.

It is believed that the E-Loan home equity loan division will shutter as a result of the restructuring, but first mortgage loan origination will still be pursued.

The majority of the layoffs will occur in the fourth quarter, and preliminary estimates value related charges at $24.2 million.

As a result, E-Loan expects operating expenses to be reduced by approximately $79 million for 2008, and estimates that net losses will decline by $28 million.

E-Loan, which pioneered online mortgage lending, was founded in 1997 and has originated over $32 billion in consumer loans since its inception.

Puerto Rico-based Banco Popular acquired E-Loan in August 2005 for $300 million.

Earlier this year, Popular exited the wholesale nonprime mortgage loan origination business, while shutting down its wholesale broker, retail, and call center divisions in the process, according to the aforementioned SEC filing.

About a month ago, Popular announced third quarter earnings which fell well short of expectations, which included setting aside $148.1 million for loan losses tied primarily to subprime mortgage holdings.

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