Residential Capital, the mortgage firm owned by GMAC Financial Services, is the latest lender to slash its workforce. The Minneapolis-based residential mortgage lender plans to eliminate 3,000 jobs, or 25% of its workforce, mostly in the fourth quarter, it said. As a result, the company expects to incur fourth-quarter charges in the range of $90 million to $110 million, related to severance charges and facility closings, it said. The job eliminations will include a range of administrative and managerial positions to business units most closely tied to originating loans. ResCap will also continue to modify its product mix away from nonprime mortgages and non-conforming prime mortgages. ResCap had cut 2,000 positions earlier this year. Private-equity behemoth Cerberus Capital Management bought a majority stake in GMAC, ResCap's parent company, from General Motors ( GM) last year. GM still owns the remaining interest. "We are focused on turning this business around," says Gina Proia, a spokeswoman for GMAC. "We are just sort of trying to structure it in a way where we have a bit more flexibility to scale the business based on market conditions." The cuts come as lenders large and small slash staff to bring expenses in line with tumbling mortgage demand. Late Tuesday, Countrywide Financial ( CFC), the nation's largest lender, said in a filing that it will take a restructuring charge of up to $150 million to eliminate up to 20% of its workforce. IndyMac Bancorp ( IMB) is also cutting 1,000 jobs, or 10% of its workforce.
ResCap said the mortgage industry continues to experience lower overall origination volumes, illiquidity in the secondary market and home price declines.