Bloodbath At CountrywideBy
Countrywide, the nation’s largest and recently most-embattled mortgage lender, announced it was laying off as many as 12,000 people today, roughly one-fifth of its 61,000-strong workforce. In a letter to employees company founder and ceo Angelo Mozilo called the current slump “the most severe in the contemporary history of our industry.” He said home price appreciation had “stopped dead in its tracks,” that there had been increased delinquencies in “far too many borrowers” and that the secondary market for jumbo loans and those that don’t qualify for government-sponsored insurance “has become nearly illiquid.” “ Mozilo said the company was cutting back sharply on subprime loans made to borrowers with less than stellar credit. Such loans made up less than 5% of the company’s total in July, down from 9% last year. The company will be migrating most of its residential mortgage loans to its own Countrywide Bank which raises deposits from small investors and is less dependent on Wall Street for funding. Mozilo said that Countrywide’s Full Spectrum unit which historically marketed subprime loans directly to consumers has shifted so that 75% of its loans this year were prime. He said the company was trying to move borrowers currently in subprime loans who might quality for prime ones into new loans where they would pay lower rates.
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