By RICHARD CLOUGH
Pasadena’s IndyMac Bancorp Inc., which runs its mortgage operations from Irvine, said on Monday it will stop accepting loan submissions and slash its workforce by nearly 4,000 people.
The cuts will reduce the company’s workforce to 3,400 positions from 7,200.
The company didn’t say how many Orange County jobs would be cut but did say it plans to keep 350 workers in its servicing retention group in Irvine and Kansas City, and 800 at its Financial Freedom Senior Funding Corp. in Financial Freedom in Irvine, Sacramento and Atlanta.
In a letter to shareholders, the company said the cuts have become necessary as it has been unable to raise money as a result of the mortgage downturn and ensuing credit crisis.
By closing its new mortgage business and cutting its workforce by more than half, the company expects to reduce operating expenses by approximately 60%.
The company plans to focus its efforts on its reverse-mortgage subsidiary, Irvine-based Financial Freedom.
The unit is a leading reverse-mortgage lender, producing more than $5 billion in new loans annually.
IndyMac, which has been wracked by the mortgage meltdown and credit crunch, said it has fallen below the level that regulators consider “well capitalized” and expects to take a significant loss when it reports its second-quarter earnings.
“We have been working with our investment bankers to raise additional capital,” said IndyMac Chief Executive Michael Perry said in the letter. “To date, we have not been successful with these efforts, and, while we will continue these efforts with our bankers and others, we don’t expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets.”
Clough is a staff writer for the Los Angeles Business Journal.
