Cost Cutting Prompts WaMu Layoffs

Approximately 64 post-funding employees at the mortgage lending operation in Florence, S.C., received layoff notices Monday, WaMu spokeswoman Lisa Friedman told MortgageDaily.com in e-mailed statements.

WaMu said it informed the employees it had reached an agreement with a vendor in India to perform their functions.

“By expanding our outsourcing efforts, we will be able to minimize expenses, remain competitive and grow the company,” WaMu said in the e-mailed statement.

Most of the affected staff will be laid off by midyear or earlier. WaMu will provide outplacement assistance, including resume preparation, job search, interview skills and career counseling. Severance to eligible employees will be based on years of service, Friedman said.

The Seattle-based thrift currently has a total of 1,058 mortgage employees in Florence, she added.

The layoff notices follow an announcement made last week by WaMu Chairman and Chief Executive, Kerry Killinger, that the company expected to grow the number of offshore full-time employees from 1,600 to 6,000 over the next two years. A spokesman declined to comment last Thursday whether any of those jobs would be mortgage-related, as it was too premature to project such.

WaMu “essentially rebuilt” its home loans operation in 2005 and added significant senior management. “Year over year, the team reduced annual expenses by nearly $350 million, while growing the sales force of retail loan officers by approximately 500,” Killinger said in the Jan. 18 prepared remarks statement.

In 2004 alone, slowed refinance activity reportedly pushed the mortgage unit to reduce its headcount by more than 10,000.

“In the past three years our team has done an outstanding job of expense management,” Killinger said in the prepared remarks. “Now we must move to a new level by reshaping our operations to support our ambitious growth plan and achieve top tier productivity.

“One important contributor will be the reorganization of our back office support groups from one shaped by historic acquisitions to an operation driven by our core business activities across the country. This reorganization will involve relocating more of our operations to lower cost domestic markets and increasing our use of offshore resources where appropriate.”