After Touting New Hires, Countrywide Begins Lay Offs

An internal e-mail within Countrywide Financial Corp. revealed that it had begun eliminating positions involved in originating loans less than two weeks after the company touted an increased workforce from employees let go from rival lenders that have collapsed.The internal e-mail, first reported by the Wall Street Journal, was sent on Friday to employees by a senior official at Countrywide's Full Spectrum Lending unit.The division largely deals with the origination of low-documentation and Alt-A mortgages.The e-mail did not disclose how many employees at the unit would be affected.The Full Spectrum Lending unit had a sales force of approximately 6,800 out of Countrywide’s total origination sales force of about 18,000, according to a Securities and Exchange Commission (SEC) quarterly filing.The Calabasas, California-based company said it ended July with 61,589 employees, up from 60,427 one month earlier and 54,655 at year end. It has added jobs every month this year.In recent weeks, Countrywide boasted of its market positioning, which allowed it to pick up employees that had been cast aside by its bankrupt competitors.However, the very survival of Countrywide has been questioned since that time as several Wall Street analysts have downgraded the company over the threat of a credit crunch."The big question is, can Countrywide survive," wrote Paul Miller, a Friedman Billings Ramsey analyst. The equity analyst suggested that a liquidity crunch lasting for more than three months could still drive Countrywide into bankruptcy.Meanwhile, Moody's downgraded Countrywide's senior debt rating from "A3" to "Baa3," its lowest investment-grade mark, because of the company’s liquidity troubles.Last week, Countrywide was forced to borrow $11.5 billion from a group of 40 banks to fund new loans.The company indicated at the time that it would further reduce its exposure to subprime, Alt-A and jumbo loan products by revamping its originations to almost exclusively conforming loans.Countrywide stock has lost more than half of its value since year’s end, when it closed at $42.45.Posted on Tuesday, August 21, 2007 by staff