Tuesday, August 21, 2007

Job cuts at Countrywide?

Countrywide, the largest mortgage lender by volume, has until recently been hiring additional staff – usually former employees of defunct rival lenders. It was only a few weeks ago that news of further staff additions at Countrywide emerged, amid layoffs at other companies in the industry. Now we’re hearing that the lender has laid off some 500 employees in its Full Spectrum origination unit, which specializes in Alt-A loans. “The company will monitor market changes and production levels on an ongoing basis and respond as appropriate”, said Countrywide in a statement. Should we rather read “more layoffs to come”?

Shares dropped 7.5% to $19,81 on the news. Countrywide stock was downgraded by rating agencies last week on speculation that tight liquidity may force the lender to file for bankruptcy protection.

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