IndyMac calls time on loan excess

New home loans are being carefully scrutinised by lenders like IndyMac

IndyMac Bancorp, one of the largest independent US mortgage lenders, is cutting 10% of its staff and focusing on safer loan prospects.

IndyMac chief executive Michael Perry admitted losses due to sub-prime loans to borrowers with poor credit history had induced "panic" in some areas.

The business would shed 1,000 jobs and concentrate on higher-quality borrowers, Mr Perry said.

Four leading US lenders have now announced job cuts in just three days.

Redundancy epidemic

Countrywide Financial announced on Friday that it would be cutting up to 12,000 jobs, one fifth of its workforce.

With earlier cuts at Countrywide - as well as at Lehman Brothers Holdings, National City and IndyMac - more than 14,000 jobs have been lost in the sector this week.

IndyMac will no longer offer sub-prime loans unless they are eligible for purchase by US government-backed operations.

Mr Perry was frank about how lenders such as IndyMac had been lulled into a false sense of security.

"Every lender made some mistakes in this credit cycle because the housing boom went on so long," he said.

Lending volume at IndyMac is expected to halve within weeks.