US: Credit Market

Countrywide Layoffs to Cost Up to $150 Million


Countrywide Financial, the largest U.S. mortgage lender, said Tuesday it expects to incur a $125 million to $150 million pretax restructuring charge in connection with its plan to eliminate 10,000 to 12,000 jobs to cope with the U.S. housing slump.

In a U.S. Securities and Exchange Commission filing, Countrywide said the charge includes $30 million to $35 million for termination benefits, $73 million to $89 million to end leases, and $22 million to $26 million of other expenses.

It expects to realize $57 million of the charge in the quarter ended Sept. 30 and the remainder primarily in the current quarter. It also expects $65 million to $90 million of the total charge to result in future cash outlays.

Countrywide Sept. 7 announced the job cuts, which remain the largest job reduction by a single company stemming from the housing slowdown. It has said it eliminated 4,935 jobs last month, leaving 55,932.

The Calabasas, California-based company has struggled with rising delinquencies and foreclosures, and has tightened its lending standards after it had difficulty accessing capital markets. It now makes most of its home loans through its banking unit, which has a wider array of funding sources.

Analysts on average expect Countrywide to post a loss of $1.21 per share for the quarter ended Sept. 30, according to Reuters Estimates. The company is scheduled to report results on Oct. 26.

Countrywide shares have fallen 57 percent this year.