Real Estate Free Fall Continues

In yet another sign that the U. S. housing market melt down is not getting any better, IndyMac Bancorp announced today that it would abandon most home lending and would lay off more than half its 7,200 employees - thus, there will be 3,600 more families at possible financial ruin. I remain convinced that unless and until the residential housing market recovers, any talk of a recovery of the economy is just talking heads blowing smoke up the public's ass. Other than the oil industry, the only business segment I know of that is booming is law firms that do foreclosure work. They are so busy that they can barely keep up with the volume of new matters. Here are some story high points from the Los Angeles Times:

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IndyMac Bancorp said Monday that it would abandon most home lending and would lay off more than half its 7,200 employees in a shuddering acknowledgment that its attempt to reshape itself as an old-fashioned lender had failed. The Pasadena-based savings and loan said it was acquiescing to federal regulators who had booted it from the list of well capitalized banks and required a change in business strategy. The bank lost $184 million in the first quarter of this year and said its second-quarter loss would be still bigger. It lost nearly $615 million last year, the first annual deficit in its 23-year history.

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IndyMac shares, which traded above $30 last July, closed at 71 cents Monday, up 4 cents. IndyMac waited until the close of regular trading to make its announcement; the stock was moving lower in after-hours trading. IndyMac will have just 3,400 workers when it is through shutting nine regional loan offices, including four in California, that made loans through independent brokers, and about 150 direct-to-customer retail offices in the West and Northeast. It wouldn't break out where the job cuts would be.

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IndyMac was started by Countrywide Financial Corp. founders Angelo Mozilo and David Loeb in 1985. It announced its cuts less than a week after Countrywide, the largest independent home lender, was taken over by Bank of America Corp., which in January stepped in as reports swirled that Countrywide might have to file for bankruptcy protection.

Countrywide to Cut Up to 12,000 Jobs

The fallout from the real estate slow down/collapse is continuing to expand with Countrywide's announcement that it is cutting 12,000 jobs. I am sure other lenders will be following suit in time if the drop in mortgages projection is correct, thus causing more folks to not be able to pay on mortgages. Meanwhile, the Chimperator is off pissing off the Australians by his unwanted presence. Here's part of a Washington Post article (http://www.washingtonpost.com/wp-dyn/content/article/2007/09/07/AR2007090702092.html?hpid=topnews):

LOS ANGELES -- Struggling mortgage lender Countrywide Financial Corp. will cut as many as 12,000 jobs in a bid to slash costs and cope with soaring foreclosures and defaults, the company said Friday. The cuts, amounting to as much as 20 percent of its work force, are needed because the company expects new mortgages to fall about 25 percent in 2008 from this year's levels, Countrywide said.

In a letter distributed to employees, Countrywide Chief Executive Angelo Mozilo called the current market cycle "the most severe in the contemporary history of our industry." "During the past two years the growth in home price appreciation has stopped dead in its tracks and in many areas of the country it has turned in the wrong direction," Mozilo said in the letter.

Earlier Friday, IndyMac Bancorp Inc. announced plans to eliminate as many as 1,000 jobs, citing difficulties from the mortgage lending and housing market downturns.

Countrywide has also shifted its loan production guidelines and now only makes loans that can be sold on the secondary market to government-backed enterprises such as Fannie Mae or Freddie Mac or that qualify under investment requirements for its banking unit.