Industry NewsMortgage

IndyMac plans 1,000 layoffs as it moves to GSE-eligible loans

Third-quarter losses could hit $38 million

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IndyMac Bancorp Inc. will shed 1,000 employees, or about 10 percent of its workforce, in the next several months as it limits loan production to those eligible for repurchase by government-sponsored mortgage repurchasers Fannie Mae and Freddie Mac. IndyMac announced today it could post third-quarter losses of 50 cents per share, or $38 million, because of illiquidity in the secondary markets and widening spreads for all mortgages not eligible for sale to the government-sponsored entities (GSEs) Fannie and Freddie. "We do anticipate that this quarter will represent the trough for our earnings during this current down cycle, as we have largely converted our mortgage production to a GSE-eligible model," IndyMac Chief Executive Officer Michael Perry said in a letter to investors. Perry said IndyMac is not in danger of losing its ability to fund loans, and expects to return to profitability in the fourth quarter and into 2008. IndyMac was "only minimally exposed to subprime...