正文
Countrywide Begins Staff Layoffs
By JAMES R. HAGERTY
August 20, 2007; Page A6 - Wall Street Journal
CountrywideFinancial Corp., reducing costs as part of its effort to weather acredit crunch, has begun laying off employees involved in originatingloans, according to an internal email.
The layoffs occurred inthe company's Full Spectrum Lending unit, which handles many homemortgages in a category known as Alt-A, or mortgages between prime andsubprime that often involve borrowers who don't document their income.Such borrowers typically don't qualify for a conforming mortgage, thetype that can be sold to government-sponsored mortgage investors FannieMae and Freddie Mac.
The email, sent to employees Friday by asenior official of Full Spectrum, discussed layoffs made that day butdidn't specify the number. The company as a whole employs about 61,000people. It had a sales force of about 6,800 in Full Spectrum out of atotal loan-origination sales force of about 18,000 as of June 30,according to a Securities and Exchange Commission filing.
Lessthan two weeks ago, Countrywide said it was hiring more loan officersfrom rivals forced to close down. But the company now is expected toreduce sharply its lending and costs because investor anxiety overrising defaults has made it almost impossible for lenders to sell manytypes of loans now deemed too risky. That is likely to lead to a steepdrop in earnings, at least in the short term, analysts say.
Friday,Countrywide's stock rose 13% to $21.43 in New York Stock Exchangecomposite trading. But the stock was still down 23% from a week beforeamid worry about the company's ability to cope with a cutoff of itsaccess to commercial paper and certain other kinds of short-termborrowing long relied upon by many mortgage lenders. Countrywide, thebiggest U.S. home-mortgage lender in terms of loan volume, announcedThursday that it borrowed $11.5 billion under a line of credit from 40banks.
An auction of about 135 foreclosed homes in San DiegoSaturday provided more sobering news for mortgage lenders. Ramsey Su,an investor and former real-estate broker who attended, calculated thatthe high bids for the homes averaged 67% of the prices they fetchedwhen they were last sold, mostly in 2004 or 2005. At a similar auctionin San Diego in May, the average was 73%. The auction was held by RealEstate Disposition Corp., Irvine, Calif., which promotes such sales onthe www.usahomeauction.com Web site. REDC officials couldn't be reachedto comment.
Write to James R. Hagerty at bob.hagerty@wsj.com
By JAMES R. HAGERTY
August 20, 2007; Page A6 - Wall Street Journal
CountrywideFinancial Corp., reducing costs as part of its effort to weather acredit crunch, has begun laying off employees involved in originatingloans, according to an internal email.
The layoffs occurred inthe company's Full Spectrum Lending unit, which handles many homemortgages in a category known as Alt-A, or mortgages between prime andsubprime that often involve borrowers who don't document their income.Such borrowers typically don't qualify for a conforming mortgage, thetype that can be sold to government-sponsored mortgage investors FannieMae and Freddie Mac.
The email, sent to employees Friday by asenior official of Full Spectrum, discussed layoffs made that day butdidn't specify the number. The company as a whole employs about 61,000people. It had a sales force of about 6,800 in Full Spectrum out of atotal loan-origination sales force of about 18,000 as of June 30,according to a Securities and Exchange Commission filing.
Lessthan two weeks ago, Countrywide said it was hiring more loan officersfrom rivals forced to close down. But the company now is expected toreduce sharply its lending and costs because investor anxiety overrising defaults has made it almost impossible for lenders to sell manytypes of loans now deemed too risky. That is likely to lead to a steepdrop in earnings, at least in the short term, analysts say.
Friday,Countrywide's stock rose 13% to $21.43 in New York Stock Exchangecomposite trading. But the stock was still down 23% from a week beforeamid worry about the company's ability to cope with a cutoff of itsaccess to commercial paper and certain other kinds of short-termborrowing long relied upon by many mortgage lenders. Countrywide, thebiggest U.S. home-mortgage lender in terms of loan volume, announcedThursday that it borrowed $11.5 billion under a line of credit from 40banks.
An auction of about 135 foreclosed homes in San DiegoSaturday provided more sobering news for mortgage lenders. Ramsey Su,an investor and former real-estate broker who attended, calculated thatthe high bids for the homes averaged 67% of the prices they fetchedwhen they were last sold, mostly in 2004 or 2005. At a similar auctionin San Diego in May, the average was 73%. The auction was held by RealEstate Disposition Corp., Irvine, Calif., which promotes such sales onthe www.usahomeauction.com Web site. REDC officials couldn't be reachedto comment.
Write to James R. Hagerty at bob.hagerty@wsj.com
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