Laurie Kulikowski
Accredited Home Lenders (LEND Quote - Cramer on LEND - Stock Picks) dropped 4% after the troubled subprime mortgage player stopped accepting new mortgage applications and cut 1,600 jobs.
The San Diego lender will close 60 retail branches and half of its 10 wholesale locations Sept. 5. Accredited will also cut back in its settlement and insurance division, though it will continue to service existing loans. The cuts reduce Accredited's workforce by 43% from its year-end tally of 4,200 employees. "These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart," said CEO James A. Konrath. Accredited is only the latest lender to shut down substantial operations following the collapse of the secondary market for mortgage securities. Earlier this week, Capital One(COF Quote - Cramer on COF - Stock Picks) said it was closing its GreenPoint Mortgage wholesale business, which specialized in nonprime mortgages, and cutting 1,900 jobs. Other big players including Countrywide (CFC Quote - Cramer on CFC - Stock Picks) have begun laying off workers, as the failure of the mortgage market made it impossible for them to fund loans by selling mortgage-backed securities. The firings come as Accredited and private-equity
firm Lone Star Capital take a soured takeover deal to the courts. Accredited has sued Lone Star to force it to close the deal, but Lone Star says it doesn't believe Accredited will be able to satisfy closing conditions.
Spokesmen for Accredited and Lone Star did not immediately return calls from TheStreet.com seeking comment.
Accredited said on Tuesday that it agreed to sell $1 billion worth of loans to an unnamed buyer under a 90-day repurchase agreement. Accredited said it has the ability to repurchase the loans in mid-November, should the secondary markets reopen.
Shares of Accredited, which had already lost more than 80% of their value this year, tumbled 32 cents to $6.28.
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