Countrywide to cut up to 12,000 jobs

By Jonathan Stempel

NEW YORK (Reuters) - Countrywide Financial Corp, the largest U.S. mortgage lender, said on Friday it plans to cut 10,000 to 12,000 jobs to cope with weak housing demand, rising foreclosures and tightening credit markets.

The cuts, which amount to as much as 20 percent of the lender's work force, will be completed over the next three months and include reductions already made, Countrywide said.

They constitute the largest work force reduction announced this year in the U.S. mortgage industry, which has lost more than 50,000 jobs after loan delinquencies rose, home price appreciation stalled, and investors stopped buying many kinds of home loans.

"This current cycle is certainly the most severe in the contemporary history of our industry," Countrywide Chief Executive Angelo Mozilo said in a letter to employees.

Countrywide, based in Calabasas, California, announced the cuts hours after the Labor Department said U.S. non-farm payrolls fell by 4,000 in August, the first decline in four years. That prompted calls for the Federal Reserve to cut interest rates before credit market turmoil drives the economy into recession.

The company said its job cuts would be mainly in mortgage production and general and administrative support. Banking, insurance and loan servicing operations would likely not be materially affected, it said.

"You need to right-size the ship," said Peter Kovalski, who helps invest more than $12 billion at Purchase, New York-based Alpine Woods Capital Investors, which owns Countrywide shares. "They're doing the right thing to quickly downsize. Things are going to get worse before they get better."

Shares of Countrywide rose 19 cents to $18.40 in after-hours trading. They had fallen 27 cents during regular Friday trading, leaving the stock down 57 percent this year.