IndyMac to Cease Most Loans, Cut Jobs - TheStreet

Mortgage lender

IndyMac

(IMB)

plummeted more than 30% in late trading Monday after the company said it was facing a serious capital crunch and is planning to fire more than half its workers.

The company said that based on communications it has had with regulators, the firm is no longer considered "well capitalized." The regulators have asked IndyMac for new business plan, the basic structure of which has been formulated.

"As we stated in our financial update on May 12, 2008, we have been working with our investment bankers to raise additional capital," the company said in a statement. "To date, we have not been successful with these efforts, and, while we will continue these efforts with our bankers and others, we don't expect to be able to raise capital until there is more stability and less uncertainty in the housing and mortgage markets."

Additionally, IndyMac plans to curtail most new loan production, saying that was the best way for the company to decrease its balance sheet. Shares of IndyMac lost 23 cents to 48 cents in extended action. The stock traded as high as $31.50 in the past year before it began to spiral lower in the midst of the mortgage crisis.

IndyMac's staff reductions will mean roughly 3,800 of its 7,200 workers will lose their jobs, which should cut operating expenses by roughly 60%.

Because of the continued downturn in home prices and IndyMac's expected increase in credit losses, the company believes it will lose more money in the second quarter than it did

in the first quarter

, when it lost $184.2 million.

This article was written by a staff member of TheStreet.com.