GE mortgage unit to trim 771 more jobs
The layoff ax fell again Thursday in the sub-prime loan industry, with WMC Mortgage in Burbank saying it would eliminate 771 jobs, more than half its workforce that remained after March cuts.
WMC, a unit of General Electric Co., said the cuts include closing offices in Costa Mesa, San Ramon, Calif., and Addison, Texas. The 50 people employed at the Costa Mesa office include some salespeople who work from home and will keep their jobs but will report to Burbank, WMC spokeswoman Brandie Young said.
Layoffs, closures and bankruptcies have become common over the last year in the sub-prime industry, whose customers have credit dings or too little income or home equity to qualify for cheaper prime mortgages.
Larger firms like Ameriquest Mortgage Co. in Orange and New Century Financial Corp. in Irvine have laid off thousands of workers.
WMC announced an earlier round of layoffs in March, when it fired more than 460 people.
At that time, it also stopped writing new loans that require no down payment -- one of the especially risky formulas that proliferated in 2005 and 2006 and are now linked to a wave of defaults across the country.
Citigroup Chief Executive Charles Prince said Thursday in Los Angeles that much of the blame must be assigned to independent mortgage firms, which are regulated far more lightly than Citi, the largest financial-services firm in the world.
“People find out how to game the system to get capital through the least possible regulatory oversight,” Prince said.
“Very exotic, aggressive mortgage products were pumped into communities where they are not appropriate,” he said during a Greenlining Institute economic conference, adding that Citigroup had refused to sell many particularly risky loan types in the sub-prime market.
In other developments Thursday:
* New Century won permission from a bankruptcy judge in Delaware to sell its loan-service division to Carrington Capital Management unless a rival tops the company’s $133.3-million bid.
Before it filed for protection from creditors April 2, New Century was the nation’s largest independent sub-prime lender. The company is planning to sell most of its assets within a few weeks.
* GMAC’s home-lending unit said it would fire as many as 700 workers, or 5% of its U.S. labor force, amid mounting losses on sub-prime loans.
The Minneapolis-based Residential Capital unit will have about 12,000 employees after the cuts, a spokeswoman said.
* Merrill Lynch & Co. said its newly acquired First Franklin unit made a record number of sub-prime home loans in January and February and added staff, even as a surge in defaults forced some rival mortgage lenders into bankruptcy.
“We were able to build on our platform, actually hire highly talented people from competition, as some of our competitors fell away,” Merrill Chief Financial Officer Jeffrey Edwards said.
Bloomberg News and the Associated Press were used in compiling this report. More stories on the Mortgage Meltdown can be found at latimes.com/subprime.
