WMC Mortgage of Burbank, Calif., a General Electric Co. unit that makes subprime and alternative-A home loans, told employees Thursday that it would cut about 460 jobs, or 20% of its staff.
"We've realigned our resources to fit the size of the market," said Brandie Young, a spokeswoman for WMC, the fifth-largest subprime lender. It is adjusting underwriting policies amid a "fluid market," she said.
Lenders are tightening underwriting standards in response both to rising delinquencies on mortgages to people with poor credit and to a slowdown in home-price gains. Last week WMC stopped making mortgages without down payments or to borrowers with credit scores below 600. In 2006 it had new-loan volume of $33 billion, according to the newsletter Inside B&C Lending.
On Thursday, New Century Financial Corp. of Irvine, Calif., the second-largest subprime lender, stopped accepting loan applications.
New Century, which also stopped making loans without down payments, cut 300 jobs, or about 4% of its work force, on March 2.
General Electric, of Fairfield, Conn., bought WMC from the private-equity firm Apollo Management LP in 2004 for an undisclosed amount. GE had exited the U.S. mortgage business in 2000 by selling its home loan unit to Wells Fargo & Co.
The $33 billion of home loans made by WMC was up 5% from 2005 and included some alt-A loans. Ms. Young would not specify the alt-A amount.