Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Saturday, September 23, 2006

Ruh-Roh... More Pink Slips


"Countrywide Financial Corp., the largest U.S. mortgage lender, told employees in some of its divisions that their jobs may be cut to save money as the housing market slows. Countrywide backed 24 percent fewer loans in August compared with a year ago."

"The weakening housing market continued to take its toll on the industry Thursday as mortgage lender Countrywide Financial Corp. disclosed the possibility of thousands of layoffs and builder KB Home reported slowing revenue growth. Calabasas-based Countrywide said it would reduce its general and administrative staff by 5% to 10%, with the exact numbers to be decided in coming months."

"The retrenchment follows a long hiring spree at Countrywide, where monthly loan production peaked at $53 billion in August 2005 and was down to $40 billion last month. The company employs about 56,000 people, up from 34,000 at the beginning of 2004."

"Countrywide has about 13,000 employees in Southern California, including salespeople at call centers. Its other major employment centers are in the Dallas area, with 10,400 employees, and the Tempe-Chandler area of Arizona, with more than 5,000 workers, Simon said."

"Separately, Westwood-based KB said it was releasing only limited financial results for its fiscal third quarter because of an internal probe of its stock option practices. Other companies caught up in the growing option controversy have had to restate earnings after similar investigations. "

"KB Home also said home orders in its U.S. and French markets plunged 43% from last year's third quarter. On the West Coast, orders plummeted 58%. Chief Executive Bruce Karatz said the results "reflect the challenging operating environment for the home building industry."'

Increasing price competition among builders affected sales and orders.

"We do not expect conditions to improve significantly in the foreseeable future," Karatz said in a statement.

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