Countrywide also announces layoffs; 500 receive pink slips
By Nancy Needham  nancy@theacorn.com

Countrywide Financial Corp., the nation's largest mortgage lender, has begun laying off staff. According to a report released by the company, about 500 positions have been eliminated across the country.

Although the company's headquarters are in Calabasas, it has offices in surrounding cities including Thousand Oaks and Simi Valley. The Calabasas and Ventura County offices were not affected by the cuts, a spokesperson said.

Reductions took place in the company's Full Spectrum and Wholesale lending divisions, which make sub-prime loans to risky customers.

Countrywide's total work force is about 61,000.

The mortgage industry's credit problems have been shaking up the stock market recently.

Growing defaults in the subprime loan sector caused an especially wild ride for investors last week. Lending standards have been tightened.

Last week the company borrowed $11.5 billion in order to continue making home loans and fight the effects of an industrywide slowdown.

"We have a situation of people living in one area and working in another," California Lutheran University economics professor Jamshid Damooei said.

"Companies are always moving people around, expanding, downsizing--it happens all the time," he said. "I'm optimistic about Countrywide. They have a system in place and liquidity provided by the Federal Reserve."

The mortgage lending industry has been struggling with an increase in mortgage defaults and with homeowners going into foreclosure when they are unable to sell their homes.

If prices in a particular area decline, a homeowner may end up owing more than their house is worth. Countrywide released the following statement from president and CEO David Sambol regarding the company's liquidity position:

"For many years, Countrywide's liquidity management framework has focused on maintaining a diverse, multi-layered assortment of financing alternatives," Sambol said. "A primary component of this framework is a committed, unsecured credit facility of $11.5 billion provided by a syndicate of 40 of the world's largest banks.

"In response to widely reported market conditions, Countrywide has elected to draw upon this entire facility to supplement its funding liquidity position," Sambol said.

Founded in 1969, Countrywide Financial Corporation is a member of the S&P 500, Forbes 2000 and Fortune 500.

Through its family of companies, Countrywide originates, purchases, securitizes, sells and services prime and sub-prime loans; provides loan closing services such as credit reports, appraisals and flood determinations; and offers banking services which include depository and home loan products.

Countrywide also underwrites securities; provides property, life and casualty insurance; and manages a mortgage reinsurance company.