Washington Mutual Inc. will cut thousands of mortgage jobs, close nearly 200 mortgage offices and take more than $5 billion in charges at its home loan unit. Additionally, the company appears to be steering away from mortgage brokers.
The Seattle-based company announced today a number of steps to shore up capital and bring its mortgage lending operation in line with decreased anticipated production.
“The mortgage market is undergoing a fundamental shift due to credit dislocation and a prolonged period of reduced capital markets liquidity,” the press release stated. “As a result, WaMu expects national mortgage originations to shrink to $1.5 trillion in 2008, down about 40 percent from an estimated $2.4 trillion this year.”
Among the planned moves are 2,600 layoffs in its home loans business, the statement said. The layoffs represent about 22 percent of its home loan staff. In addition, 550 corporate and support jobs will be cut.
WaMu will also close 190 of its 336 home loan centers and sales offices as well as nine home loans processing and call centers. The company said it will discontinue remaining subprime operations, shut down its mortgage banker finance warehouse lending operation and close WaMu Capital Corp. — an institutional broker-dealer business.
The company said it plans to accelerate an expanded focus on its “profitable” retail lending network.
While the moves are expected to reduce expenses by $500 million next year, a fourth quarter after tax charge of $1.6 billion will be taken to write down all of the goodwill associated with the home lending unit, according to the announcement. A provision for loan losses of as much as $1.6 billion is expected this quarter, and a loan loss provision of as much as $2.0 billion is anticipated during the first quarter of next year.
“The first quarter range reflects the company’s current view that prevailing adverse conditions in the credit and housing markets will persist through 2008,” WaMu stated. “The company also currently expects quarterly loan loss provisions through the end of 2008 to remain elevated.”
Depending on credit card securitizations, “there may be some additional variation,” the statement said.
WaMu said it will issue $2.5 billion in convertible preferred stock and cut its dividend to $0.15 per share from $0.56 per share. The moves are anticipated to boost its tangible equity by $3.7 billion.
WaMu Home Loans Layoffs
Number Laid Off
|Sept. 14, 2007||1,000|
|July 2, 2007||210|
|June 18, 2007||120|
|June 12, 2007||60|
|Feb. 15, 2007||250|
|Dec. 18, 2006||300|
|Nov. 2, 2006||65|
|Aug. 9, 2006||82|
|July 14, 2006||350|
|May 24, 2006||1,400|
|May 4, 2006||250|
|Feb. 16, 2006||2,500|
|Jan. 26, 2006||64|
|Nov. 18, 2004||2,000|
|July 23, 2004||2,500|
|Jan. 13, 2004||2,900|
|Oct. 30, 2003||4,000|