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WMC Mortgage Cuts Most of Staff

It’s been reported that WMC Mortgage, the wholesale residential subprime and Alt-A mortgage unit of GE Money, laid off the majority of its staff yesterday, per the OC Register.

It is believed that a skeleton crew is sticking around to clear out the remaining pipeline, and that all loan processors, underwriters, and loan officers are now gone.

My understanding is that the lender is still accepting new submissions, though volume is probably extremely light with the reduced staff.

“They’re working the pipeline that is here,” said a customer service operator. “They are taking originations, but we’re down to minimal staff levels as of yesterday afternoon.”

According to the WMC website, the mortgage lender still offers jumbo loans up to $1 million, financing up to 95% loan-to-value, and Fico scores as low as 530.

Most thought WMC had already ceased operations months ago, as GE previously announced that is was exiting the business after the mortgage crisis came to the forefront.

WMC was subsequently put up for sale earlier this summer after a rise in defaults forced the conglomerate to reconsider its position in the subprime mortgage business.

Despite previous reports listing the lender as a discontinued operation, GE spokesman Russell Wilkerson said there is still a “decent number of employees” at the company and that it still had loans on its books.

“We’re in the process of selling it,” says Wilkerson. The question remains whether anyone wants to buy it, and what’s it’s really worth at this point.

Several weeks ago, GE said it expected to take a $300 million to $400 million charge in the third quarter as it exited its WMC Mortgage business.

Back in March, WMC Mortgage cut roughly 20 percent of its staff, or 460 employees, and said it would no longer write mortgages with no down payments.

Since then, the company has cut about 70 percent of its workforce and sold $3.7 billion of its loans, leaving $1.1 billion in mortgages on the books as it seeks a suitor.

GE acquired WMC in 2004 from private equity firm Apollo Management, and analysts estimated that it made up only a small portion of their total income (now losses) over the last few years.

To give you an idea, WMC provided roughly $100 million of its parent company’s $20.8 billion total profit in 2006.

See the latest mortgage layoffs, closures, mergers, and rumors.

Update: Here’s a quote from a recent article regarding the matter: “Everybody over there [at WMC] thought it was being sold, but on Monday they were told it was being dismantled instead. A lot of guys were let go Monday, and are now looking for jobs.”

GE denied the dismantling, saying it was a restructuring effort. “We are still trying to sell WMC,” said Richard Jones, spokesman for GE Money. “There were a number of layoffs on Monday at WMC as part of a restructuring.”

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