Countrywide to cut up to 12,000 jobs amid mortgage trouble

LOS ANGELES -- The cuts, amounting to as much as 20% of its workforce, are needed because the company expects new mortgages to fall about 25% in 2008 from this year's levels, Countrywide said.

In a letter distributed to employees, Countrywide CEO Angelo Mozilo called the current market cycle "the most severe in the contemporary history of our industry."

"During the past two years the growth in home price appreciation has stopped dead in its tracks and in many areas of the country it has turned in the wrong direction," Mozilo said in the letter.

In recent weeks, Countrywide borrowed $11.5 billion and sold a $2 billion stake to Bank of America so it could keep operating its retail banking and mortgage lending businesses.

The job cuts planned during the next three months are expected to center primarily on the company's production divisions and its general and administrative support areas.

Actual reductions could be lower if interest rates and other market conditions improve, Countrywide said.

The latest cuts followed the elimination of about 900 positions earlier this week and 500 others last month.

The company employed more than 61,000 people as of July 31, with about 34,000 working in loan production.

Earlier Friday, IndyMac Bancorp announced plans to eliminate as many as 1,000 jobs, citing difficulties from the mortgage lending and housing market downturns.

The Pasadena, Calif.-based mortgage lender and bank said it expects its loan production volume to decline by roughly half in the fourth quarter.

Countrywide said it intends to keep transferring its residential lending business into its Countrywide Bank unit as a way to strengthen its access to funding.

Almost all of its residential lending activity will be originated through the bank by the end of this month, the company said.