The largest U.S. home-mortgage lender announced Friday that it would trim costs in the face of a severe drop in home-mortgage lending. The combination of rising defaults and falling house prices has created a stampede of investors who now deem the market for many types of mortgages too risky, according to business publications.
The company expects to reduce its work force by about 20 percent – some 12,000 jobs – over the next three months, in anticipation of a predicted 25 percent drop in new mortgages for 2008 from 2007’s loan business.
In a letter to employees released last week, Countrywide Financial Corp.’s CEO, Angelo Mozilo, called the down cycle “the most severe in the contemporary history of our industry.”
On Friday, the Wall Street Journal reported that over the past few weeks, Countrywide, which has offices in downtown Sonoma, borrowed $11.5 billion and sold a $2 billion stake to Bank of America so it could continue to operate its retail banking and mortgage lending businesses.
