2,500 Countrywide Job Cuts

The Calabasas, Calif.-based company announced Tuesday it initiated an expense and headcount reduction program that it expects will generate annual cost savings of over $500 million by year end, citing “changing market conditions” as the reason.

Job eliminations began a month ago and will impact over 2,500 workers overall, with a majority taking place this quarter, spokesman Rick Simon told MortgageDaily.com in an e-mail statement. The reduction in force plan affects jobs in non-revenue-producing areas of the company and does not impact the salesforce or direct support personnel in the production divisions.

The 2,500-plus job cuts were disclosed in a teleconference Tuesday, Simon said. Last month, MortgageDaily.com reported on the planned 5 percent to 10 percent cut in general and administrative jobs, but a headcount was not available at the time.

The transitional market continued to impact the mortgage banking segment in the third quarter, as significant declines in interest rates put pressure on loan servicing sector earnings and continued moderation in real estate finance activity pushed down loan production earning, Chairman and Chief Executive Angelo R. Mozilo noted in the announcements.

Countrywide continues “to expect that margins will remain under pressure and that pricing will remain competitive as the mortgage market consolidates,” Mozilo added. “In addition, pay-option loans — which have historically provided higher margins — are declining as a percentage of total production and have experienced margin erosion, and this trend may continue.”

However, “Countrywide continues to actively and aggressively expand its salesforce, in keeping with the company’s strategy of increasing market share,” Simon said, noting the company sees an opportunity to hire top production personnel as other companies merge and close in the current consolidation of the industry.

Simon also pointed out the reduction in force will not be entirely responsible for the $500 million in annualized cost savings, as “prior to announcing job cuts, the company fully analyzed discretionary expenses and made cuts in those areas.”