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Tuesday, October 24, 2006

Countrywide laying off more than 2,500 employees

By Jonathan Stempel Tue Oct 24, 2:37 PM ET

NEW YORK (Reuters) - Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.

The cuts affect about 4 percent of Calabasas, California-based Countrywide's (NYSE:CFC - news) workforce.
They follow thousands of job cuts announced this year by other large mortgage lenders, including Washington Mutual Inc. (NYSE:WM - news) and subprime lender Ameriquest Mortgage Co.
On a conference call, Chief Operating Officer David Sambol said Countrywide expects to realize "a big portion" of its overall expense savings in the fourth quarter.

The company had already reduced staffing by 847 people from July to September, ending the quarter with 55,564 employees.

"Gross layoffs will exceed 2,500 employees," Sambol said.

The company in July announced the planned expense reductions, but didn't specify the number of job losses.
Countrywide on Tuesday also said third-quarter profit rose 2 percent to $647.6 million from $633.9 million last year.

Profit was $1.03 per share in both periods. Analysts polled by Reuters Estimates on average forecast $1.08.

Better results at Countrywide Bank and in capital markets and insurance cushioned a 22 percent drop in mortgage lending.
In afternoon trading, Countrywide shares rose $1.62, or 4.6 percent, to $36.83 on the
New York Stock exchange.

Demand for mortgages has softened after 17 Federal Reserve interest-rate increases, and after home prices soared in many markets.
On October 12, the Fed reported "widespread cooling" in housing, including lower prices, softening sales and rising inventories of unsold homes.

"The current environment gives us slower growth opportunities in mortgage banking," Chief Executive Angelo Mozilo said on the conference call.
He said he expects the interest-rate and competitive environment to continue to drive out weaker lenders in 2007.

"This cleansing that takes place as the markets pull back is always healthy in the long run, for both Countrywide and the industry," he said.
Last week, Washington Mutual, the No. 3 mortgage lender and largest savings and loan, said it has cut 9,742 jobs, or 16 percent, this year.

In May the parent of Ameriquest, which lends to people with weaker credit, set plans to lay off 3,800 employees, or one-third of its workforce.


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