UPDATE 1-National City folds home equity unit, cuts jobs

Thu Aug 16, 2007 2:15pm EDT

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NEW YORK Aug 16 (Reuters) - National City Corp. NCC.N, one of the largest U.S. regional banks, on Thursday said it would fold its home equity business into National City Mortgage Co., a move designed to cut costs and respond to deteriorating mortgage markets.

Cleveland-based National City said some National Home Equity staff will join National City Mortgage's wholesale division, but many sales and support jobs will be eliminated.

"We are continuing to closely monitor the market and will continue to take steps to ensure originations are appropriately in line with market conditions," National City Chief Financial Officer Jeffrey Kelly said in a statement.

The move comes 10 days after National Home Equity, which originates loans and credit lines through mortgage brokers, suspended approvals as demand dried up in secondary mortgage markets.

National City said it will still offer mortgages, equity lines and loans through its branches, mortgage offices and a network of correspondents. The bank also said the mortgage unit will resume extending home equity lines when market conditions improve.

"We believe that the reduction in marketability of many mortgage products will continue for some time," Kelly said.

National City spokeswoman Kristen Baird Adams had no comment about the number of job cuts or the estimated financial impact of the move.

(Reporting by Joseph Giannone)

((Editing by Derek Caney/Deborah Cohen; Reuters messaging: joseph.giannone.reuters.com@reuters.net;+1 646 223 6184))

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