GE says subprime mortgage unit has cut lending

BOSTON (Reuters) - General Electric Co.'s (GE.N: Quote, Profile, Research, Stock Buzz) WMC Mortgage subprime lending unit has sharply cut back on lending activity, an executive said on Friday.

"We curtailed production dramatically during the first quarter," said Mark Begor, president and chief executive officer of GE Money, Americas, on a conference call with analysts. "We've tightened up a lot on our guidelines and really curtailed a lot of the business activities."

He said that the Burbank, California-based WMC unit, which makes home loans to less-creditworthy borrowers, made just $3.4 billion in new loans during the first quarter, down from $9 billion in the fourth quarter.

GE Money unit earnings, which rose 2 percent in the most recent quarter, were hurt by challenges at its U.S. mortgage business, WMC Mortgage.

WMC laid off 460 people, or about 20 percent of its staff, last month.

Default rates in the subprime segment of the U.S. mortgage market have jumped in recent months as the housing industry has slowed and prices have fallen. The turmoil led at least 20 lenders in the subprime sector, which serves borrowers with poor credit histories at high interest rates, to go out of business. The crisis has triggered broader concerns the fallout may spread to mainstream lenders and damage the economy.