E-LOAN Layoffs

E-LOAN gave 60-day advance layoff notices to 410 employees Thursday at its Pleasanton, Calif., headquarters, spokeswoman Laurie Azzano told MortgageDaily.com.

“The current mortgage environment” is to blame for the workforce reduction, Azzano said.

The job cuts complete the layoff action parent Popular Inc. warned it would make during the fourth quarter as part of a restructuring plan to reduce marketing and personnel costs at E-LOAN, according to the parent’s third quarter financial report filed with the Securities and Exchange Commission.

The parent wanted to concentrate marketing investment toward the Internet and origination of first mortgages eligible for sale to the government-sponsored enterprises. The initiative is expected to reduce operating expenses by approximately $79 million and net losses by $28 million in 2008.

The plan called for 513 layoffs from a total workforce of 771, but about 100 of the planned job cuts represented employees that are on the books but not employed, including contract workers or individuals on long-term medical leave, Azzano said. The personnel reduction is expected to result in a $4.4 million severance charge for the fourth quarter.

Popular’s third quarter net income of $36 million, compared with over $82 million a year earlier, was partially impacted by an $85 million increase in loan loss provisions.

Of Popular’s $33 billion loan portfolio as of the third quarter, $11 billion consists of mortgages.

Last January, ahead of its peers, Popular exited subprime wholesale lending. As a result of that move, Popular Financial and its subsidiaries planned to eliminate around 627 positions out of a total of 2,449 at the time.

Later that same month, E-LOAN agreed to pay $13.6 million to approximately 500 loan consultants employed by the company from Dec. 23, 2001, through June 30, 2006. The settlement was over disputed unpaid overtime to mortgage consultants.