Jobs Cut at Fairbanks, WaMu

January 26, 2004

2,204 layoffs slated by second quarter

By Coco Salazar

Two mortgage lending companies said they will layoff a combined 2,204 mortgage employees by the second quarter of the year.

Washington Mutual Inc. announced Wednesday that it will eliminate 2,900 full-time equivalent positions by the end of the first quarter, and according to spokesman Alan Gulick, 2,000 of these will be in its home lending business.

"Lowering the headcount across the company is necessary and integral part of achieving our $1 billion (cost) reduction goal," said company executive Craig Chapman, in a prepared remarks statement.

In the fourth quarter, WaMu announced its plans to reduce its overall cost structure as a step to higher earnings growth in 2004. In the same quarter, 4,500 full-time mortgage positions were eliminated and resulted in savings of $166 billion, said Chapman.

WaMu said it plans to achieve its targeted savings over the next six quarters and anticipates that 50% of the goal will result from increased efficiencies in its home lending business as it completes the integration of the mortgage businesses acquired from 2000 and 2001, streamlines mortgage operations and rationalizes its selection of technology platforms.

Fifteen percent of the savings will spring from the total employee cutoffs, said the executive.

To further streamline operations, the banking behemoth said it has plans of reducing the number of its mortgage fulfillment centers from 58 to 40.

"This and other proactive steps are aimed at lowering both our cost to originate as well as service loans," added Chapman.

Another 204 layoffs are projected within Fairbanks Capital Corp., a Salt Lake City, Utah-headquartered company that says it specializes in servicing nonprime residential mortgage loans and employs over 1,500 associates.

The layoffs will occur as a result of the company's decision to shut down its Austin, Texas, site by April. Fairbanks said the closure is part of the company's effort to budget and streamline operations. Three company facilities will remain -- located in Hatboro, Pa., Salt Lake City and Jacksonville, Fla. Only a number of the employees will be offered jobs in the latter two Fairbanks locations.

Employees will receive severance payments and most will continue to work through mid- to late-March, said the nonprime lender.

Fairbanks says it is a privately held company owned by affiliates of PMI Mortgage Insurance, Financial Security Assurance Inc. and senior management, and that it services approximately 425,000 nonprime residential mortgage loans.


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