Yet another mortgage lender said today that it is laying off staff amid what should now be recognized as a historic downturn in the mortgage industry. Subprime lender Delta Financial -- the subject of quite a bit of past posts on this site -- said today that it will cut 20 percent of its work force, or roughly 300 employees. From the press statement:
"The rapid deterioration of the credit markets has caused issues in our sector that are beyond our control," explained Hugh Miller, president and chief executive officer. "As we continue to make the necessary rate increases and program cuts in order to address the changing business environment, the result in the near term is a likely reduction in loan production. Accordingly, it is with sadness that we must reduce our workforce to address the anticipated decrease in originations. We deeply regret having to take this action, but it is the fiscally responsible decision to make at this time. We are extremely grateful to all those in the Delta family for their dedication to the Company." The Company has eliminated approximately 300 jobs, resulting in an approximate 20% reduction in its nationwide workforce. The majority of the reductions will result from the closing of the organization's satellite wholesale offices in Florida, Texas, and California, and the elimination of certain positions involved in the originations process. The Company expects that the centralized structure of its wholesale operations will help limit disruption of normal business activities.
The company said it expects to take a pre-tax charge of $2.0 to $2.5 million as a result of the layoffs. Of the subprime lender bunch, Delta had a well-earned reputation as one of the tightest ships in the business -- I'd even lauded the company in May for being one of the only subprime lenders to book a profit (Delta had earned $4.9 million in the first quarter of 2007). Fortunes can change quickly.