Ka-Boom: Countrywide Will Cut 10,000 to 12,000 Jobs
A Countrywide press release today lowered the boom on rumors that had been circulating for the past few days, and said it will lay off 10,000 to 12,000 employees in the next three months -- representing up to 20 percent of its current workforce. Here is Countrywide's full press statement. I'd blogged about the pending layoffs on September 4th. The layoffs will represent the largest job cut in mortgage history outside of a bankruptcy, underscoring the depths to which the current housing and mortgage markets have fallen. Countrywide also said that it now expects origination volume to fall 25 percent in 2008 over comparable volume from this year -- a clear sign that the company understands that the current market turbulence is not a short-term event. The nation's largest lender said that while it still offers what it called the "among the broadest" loan programs in the industry, it has also revised its origination guidelines such that all originated loans are either saleable to the secondary market, and that any loans held for investment are only high-quality prime loans. The change in investment strategy might hint at future write-downs in the company's mortgage portfolio. Earlier rumors surrounding the mass layoff announcement had said that Countrywide was also preparing to take significant losses on loans held in its investment and sale portfolios, although today's announcement made no such references to any valuation adjustments. The layoff news in and of itself is stunning enough, however, and my best wishes go out to all those affected by today's move. I know that plenty of Countrywide employees subscribe to this blog. Update: The Wall Street Journal has obtained a copy of a letter sent to employees today.