GE Capital Mortgage Corp., reacting to a contracting mortgage market, is slashing 15% of its work force.

The layoffs should total 400 to 425 jobs of a total staff of 3,000, according to a company spokesman.

The staff cuts, "are because volume is down," he said. "We've identified redundancies and will make the reductions across the company."

The moves come against a backdrop of tough times in the home-lending industry and some top-level management shifts at GE Capital Mortgage, a Raleigh, N.C., unit of GE Capital Corp.

Many mortgage lenders have suffered origination declines of 30% to 50% over the past year as the refinancing boom has faded. As a result, broad- based staff cuts have been rampant.

GE Mortgage - a leader in servicing and mortgage insurance - has not escaped the tumult. In addition to declining volume, it has taken some big credit losses in the business of insuring pools of loans backing mortgage securities.

Meanwhile, the company has been realigning its top management. In November, the mortgage unit tapped Mike Zafirovski, a GE Capital Corp. executive, to fill the new position of president.

In the latest executive moves, GE Capital Mortgage has reassigned Alan L. Hainey and Stuart M. Lopes.

Mr. Hainey, who had been in charge of GE's efforts to gather mortgages from other lenders, will now be "fully dedicated" to helping manage GE's exposure to pool insurance liability, the spokesman said. Losses in pool insurance caused GE to take a $180 million reserve last year. The company has stopped writing this type of insurance.

Mr. Hainey's responsibilities in wholesale production will be assumed by Rich Boruta, an executive vice president who also heads home-equity lending.

Mr. Lopes, a senior vice president, had been in charge of risk management at GE Capital Mortgage Services. He will now "help the company put greater focus on automation and its impact on the industry," the spokesman said. Mr. Lopes' former position has yet to be filled.

The spokesman said the shifts of Mr. Hainey and Mr. Lopes were unrelated to the job cuts.

The cuts, he said, are part of an effort on GE's part to bring its infrastructure in line with current volume. "Its a totally different industry. We are changing our business to reflect that."

Generally higher interest rates in the past year have combined with a resurgence among portfolio lenders to make the operating environment extremely difficult for mortgage banks. Rate cutting has been widespread and originations are often a losing proposition.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.