Discover your dream Career
For Recruiters

Countrywide, Bear Stearns Layoffs - Tip of An Iceberg?

Countrywide Financial is reportedly laying off staff at one of its mortgage lending units. Could that portend layoffs elsewhere?

It might, not only among mortgage originators but in a number of related sectors of Wall Street. Various industry observers have highlighted structured credit, prime brokerage and private equity as areas most likely to be cut.

An unspecified number of people were laid off Friday at Countrywide's Full Spectrum Lending subsidiary, which originates many nonconforming mortgage loans, according to Monday's Wall Street Journal. Much of Full Spectrum's business consists of Alt-A mortgages, the Journal says. Although borrowers qualify for these loans without documenting their income, they aren't considered sub-prime. Full Spectrum has a sales force of 6,800.

Countrywide is the leading U.S. home mortgage lender and the latest to run into credit trouble. The company roiled markets last week when it disclosed it drew down its entire $11.5 billion credit line from 40 banks, after having difficulty borrowing in regular credit markets.

Last Thursday, Bear Stearns announced 240 layoffs in mortgage lending units in Irvine, Calif., and Scottsdale, Ariz. The bank said it decided to reduce staffing levels and close two operation centers as part of a normal review aimed at finding areas "where we can eliminate redundancies and improve the efficiency of our operations."

Two mortgage-centered hedge funds run by Bear Stearns collapsed around the beginning of July, sparking a broad selloff in financial markets and prompting other banks and investors to shy away from making risky loans. But the recent layoffs appear less related to the parent company's troubles than to an industry-wide pullback from non-traditional mortgage lending that proliferated in recent years. Bear Stearns reportedly is 12th-largest U.S. home lender.

author-card-avatar
AUTHORAnonymous Insider Comment
  • Ro
    Robert Del Rosso
    27 August 2007

    I am an unemployed Commercial Credit Analyst.
    In April 2006, when I worked for a Mortgage Broker as a telemarketer, I was not obtaining sufficient refinancing leads. Another telemarketer was obtaining 4 or 5 leads per day. She advised me to tell prospective borrowers that we had mortgage rates as low as one per cent!
    I said I am not going to tell a customer that he or she could get a one per cent mortgage! (I felt it was very unrealistic!) She said: "we have adjustable mortgages that start at one per cent!"
    I was fired since I did not obtain sufficient leads of at least two per day.
    I wonder how many people they gave "one per cent" adjustable mortgages to are seeing their rates increase!
    My forte is not even telemarketing, but Credit Analysis.

  • An
    Antoine Devine
    23 August 2007

    American Home Lenders, considered the nation's 2nd largest subprime lender, announced it is laying off 1600 people, and has suspended operations-they are not making any loans for the time being.

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
Selby Jennings
Vice President, Private Credit
Selby Jennings
New York, United States
Selby Jennings
Managing Director - Portfolio Management
Selby Jennings
New York, United States
Selby Jennings
Private Credit Associate
Selby Jennings
New York, United States
Selby Jennings
Private Credit Analyst or Associate
Selby Jennings
United States
Selby Jennings
Private Credit Associate
Selby Jennings
Chicago, United States
Selby Jennings
Private Credit AVP/VP
Selby Jennings
Los Angeles, United States

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.