UPDATE 1-GE's WMC subprime unit says sells $3 bln in loans

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By Scott Malone

BOSTON, July 3 (Reuters) - General Electric Co.'s (GE.N) subprime lending arm WMC Mortgage sold about $3 billion in nonprime loans in the second quarter, lowering the volume of loans on its books to about $1.5 billion, a company spokesman said on Tuesday.

The loans sold included a mix of first and second liens, said GE Money spokesman Michael Ettlemyer.

The Burbank, California-based business was one of scores of lenders targeting the subprime market, or borrowers with weaker credit histories. Defaults in this segment of the market have surged this year, leading some borrowers to lose their homes and causing about 50 subprime lenders to close.

WMC has cut back sharply on its subprime lending this year. When GE reported first-quarter financial results, it said WMC had made just $3.4 billion in new loans during the first quarter, down from $9 billion in the fourth quarter.

The GE unit has also laid off more than 1,200 staffers, cutting its head count to about 700.

In June it said it had adopted new standards on low-downpayment home loans and as a result expected to offer half as many subprime hybrid adjustable rate mortgages as it had previously.