Accredited halts lending, will cut 1,600 jobs

The mortgage lender plans to close all of its 60 retail lending branches by September, but will honor existing loans.
August 22 2007: 9:32 AM EDT

NEW YORK (Reuters) -- Accredited Home Lenders said Wednesday it has stopped taking loan applications and will cut 1,600 jobs, citing turmoil in the subprime mortgage industry.

Shares of Accredited (up $0.00 to $6.55, Charts) fell over 3 percent in pre-market trade on the news.

The cutbacks are the latest for the San Diego-based lender, which has sued Lone Star Funds to try to save its acquisition by the private equity firm for about $400 million. It was not immediately clear how the cutbacks would affect the lawsuit or merger.

Accredited said it will close substantially all of its retail lending business, consisting of 60 branches and five central support operations, by Sept. 5, affecting 480 workers. It also plans to shut five of 10 wholesale divisions as of that date, eliminating 490 of 830 jobs.

The company also plans to cut 180 of 400 jobs at its headquarters and substantially reduce the size of its title insurance and settlement operations.

Following the cuts, Accredited said it will employ about 1,000 people, down from 2,600 as of June 30 and 4,200 at the start of the year.

(Reuters) - Banks and financial services companies with banking operations are in the process of cutting tens of thousands of jobs.

Some have said they are reducing staffing to lower their cost structures. Others are doing so because interest rate changes have made it more difficult to profit from lending. Still others are reacting to tightening credit conditions, especially for mortgage lending operations.

Challenger, Gray & Christmas Inc., the consulting firm, said on Tuesday the U.S. financial industry has announced 87,962 job cuts this year, 75 percent more than in all of 2006. It said 35,830 of the cuts, or 41 percent, relate to housing market problems.

The following is a selection of U.S. financial companies that have set job cuts this year or are otherwise reducing staffing.

ACCREDITED HOME LENDERS HOLDING CO. (LEND.O: Quote, Profile, Research)

Accredit Home Lenders, a subprime lender, said on Wednesday it will cut 1,600 jobs. The San Diego-based company said it will close nearly all of its retail lending branches and support centers, as well as five of its 10 wholesale divisions, effective September 5. Staff will also be laid off in the company's Inzura Settlement Services unit and its headquarters.

BEAR STEARNS COS (BSC.N: Quote, Profile, Research)

Bear Stearns, a Wall Street investment bank, on August 16 said it will cut 240 subprime lending jobs, including 100 at its Encore Credit unit and 140 at its Bear Stearns Residential unit. The New York-based company also said it is closing two operations centers.

CAPITAL ONE FINANCIAL CORP. (COF.N: Quote, Profile, Research)

Capital One, the largest independent credit card issuer, on August 20 said it will eliminate 1,900 jobs and close its GreenPoint Mortgage Inc. wholesale lending unit. In June, the McLean, Virginia-based company announced plans to cut 2,000 jobs, or 6 percent of its work force, to help save $700 million annually by 2009.

CITIGROUP INC. (C.N: Quote, Profile, Research)

Citigroup, the largest bank, on April 11 said it will eliminate 17,000 jobs and move an additional 9,500 jobs to lower-cost locations, hoping to save $4.58 billion annually by 2009. The New York-based company at the time said it employed roughly 327,000 people.

COUNTRYWIDE FINANCIAL CORP. (CFC.N: Quote, Profile, Research)

Countrywide, the largest mortgage lender, on August 20 said it eliminated about 500 jobs last week in its Full Spectrum division, which lends to people who do not qualify for the best rates, and the subprime unit of its wholesale lending division. The Calabasas, California-based company had added nearly 7,000 workers in 2007 before facing a credit shortfall.

FIRST MAGNUS FINANCIAL CORP.

The privately held mortgage lender filed for bankruptcy protection on Tuesday and said it had laid off most of its nearly 6,000 workers, leaving it with about 60 employees. The Tucson, Arizona-based company was the 16th-largest U.S. mortgage lender from January to June.

H&R BLOCK INC. (HRB.N: Quote, Profile, Research)

H&R Block, the largest tax preparer, in May said it planned to cut 615 jobs at its Option One Mortgage Corp. unit. On August 9, it said the number of cuts might grow. Kansas City, Missouri-based H&R Block is planning by year-end to sell Option One to private equity firm Cerberus Capital Management.

HSBC HOLDINGS Plc (HSBA.L: Quote, Profile, Research)

The bank's U.S. mortgage unit said on Wednesday it will close an office in Indiana, cutting about 600 jobs. Affected workers will be offered a chance to apply for other jobs within the company. London-based HSBC employs about 60,000 people in the United States.

NATIONAL CITY CORP. (NCC.N: Quote, Profile, Research)

National City, the ninth-largest bank, on August 16 said it would eliminate an unspecified number of sales and support jobs by folding its home equity business into National City Mortgage Co., its main home loan unit. The company is based in Cleveland.

SUNTRUST BANKS INC. (STI.N: Quote, Profile, Research)

SunTrust, the seventh-largest bank, on August 20 said it plans to eliminate about 2,400 jobs by the end of next year as part of a plan to save $530 million annually by 2009. The Atlanta-based bank said the cuts equal about 7 percent of its work force.

WACHOVIA CORP. (WB.N: Quote, Profile, Research)

Wachovia, the fourth-largest bank, is eliminating about 4,000 jobs in a bid to save $1 billion annually in a multiyear program slated to end this year. The Charlotte, North Carolina-based company undertook the cuts to reduce an expense base that was higher than most of its peers.

WASHINGTON MUTUAL INC. (WM.N: Quote, Profile, Research)

Washington Mutual, the largest savings and loan, cut 10,688 jobs in the year ended March 31, primarily in its mortgage operations, to bring costs in line with reduced business activity. The Seattle-based thrift added about 300 net jobs in the second quarter.

WELLS FARGO & CO. (WFC.N: Quote, Profile, Research)

Wells Fargo, the fifth-largest bank, on July 26 said it will close its subprime wholesale lending business, resulting in the loss of 170 jobs. It said it will seek other jobs for 67 other affected workers. San Francisco-based Wells Fargo last winter cut 444 subprime mortgage jobs.

MORTGAGE LENDERS

Many mortgage lenders that remain in business have cut jobs this year, including Accredited Home Lenders Holding Co. (LEND.O: Quote, Profile, Research) and NovaStar Financial Inc. (NFI.N: Quote, Profile, Research).

(Reporting by Jonathan Stempel and Dan Wilchins)