Countrywide Credit Industries, battered by reduced originations and price cutting, plans to cut about' 800 jobs over the next 30 days, according to a source close to the company.
Countrywide's total employment stood at 4,066 at the end of May, according to a company spokeswoman. About 250 workers have been laid off since then, bringing current employment to about 3,800, sources said.
A Countrywide spokeswoman declined to comment.
Countrywide, along with the rest of the mortgage lending industry, is undergoing a painful transition this year. The company, according to a source, now more fully realizes "the depth of the market slump."
Last year, with interest rates dropping and the demand for loans growing, mortgage banks increased staff sizes sharply. This year, rising rates have choked demand for refinancings and volume has dropped between 30% and 40%, and lenders are facing stark choices.
Countrywide last week reported earnings of 37 cents a share, down from 49 cents a year ago, causing analysts to lower earnings estimates. Some expressed impatience with the pace of cost cutting at the No. 1 mortgage lender.
Total employment at Countrywide peaked in February at just over 4,800 and had dropped by about 15% by the end of May.
Analysts were generally unsurprised by the move. "They have the luxury of doing this because they have a $93 billion servicing portfolio," said Sy Jacobs, an analyst in New York with Alex. Brown & Sons.
"They have clearly decided to step back from third-party originations."
Indeed, the cutting thus far at Countrywide has been most severe in third-party originations, the division of a mortgage bank that buys loans from brokers or correspondents.
Staffing in Countrywide's wholesale system is down about 43% from its high in December, from 959 to 543. Many jobs have also been lost in correspondent lending, which employed 248 people at the end of May, down from 375 in February.
Job losses are rampant throughout the industry. Just last week, GMAC Mortgage, the lending arm of General Motors Corp., announced that it plans to cut staff by 500, to 3,500. Prudential Home Mortgage announced in April its intention to cut 600, nearly 12% of its employees.
And job cuts are not just happening at the big companies. Many smaller mortgage lenders and brokers have fired workers as they struggle to stay afloat.
So far, however, job cuts have not been reflected in statistics collected by the Bureau of Labor Statistics, which reports May employment in the sector just 3,000 below the peak in April.
