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Last Updated: Saturday, 8 September 2007, 02:18 GMT 03:18 UK
US mortgage lender slashes jobs
Countrywide office in Los Angeles
Countrywide has seen share value halved
The biggest mortgage lender in the United States, Countrywide Financial, says it is making big job cuts.

Countrywide's Chief Executive, Angelo Mozilo, said the company - based in California - was being forced to cut up to 12,000 jobs, one fifth of its staff.

Mr Mozilo said the firm had been badly hit by the US house price slump and the increasing number of buyers who are defaulting on mortgage repayments.

The firm expects new mortgages to fall by 25% in 2008, compared with 2007.

"During the past two years the growth in home price appreciation has stopped dead in its tracks," wrote Mr Mozilo in a letter to staff, "and in many areas of the country it has turned in the wrong direction."

In recent weeks Countrywide borrowed more than $11.5bn (5.6bn) and sold a $2bn stake to Bank of America so it could keep operating its retail banking and mortgage lending businesses.

As of July the company employed more than 61,000 people - although the past few weeks have already seen about 1,400 jobs lost.

Countrywide shares have fallen 57% this year.

"As we carry out our plan, the company's overarching focus is exactly where it has always been: to remain an industry leader in the US residential lending business," said Mr Mozilo.

The company's problems reflect an industry-wide slump in response to the housing crisis, says the BBC's Peter Bowes in Los Angeles.

Dozens of lenders have either cut back operations or left the industry altogether.

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