A revolving door at Countrywide

Not more than two weeks ago, Countrywide Financial (NYSE:CFC) began hiring laid off workers from other mortgage lenders who, for one reason or another (usually something bad), didn't need as many employees anymore.

Earlier today, it was reported that some of these "new hires" may not have stuck around long enough to even get a look at their new Countrywide business cards.

Countrywide laying off loan-origination staff: WSJ
SAN FRANICSCO (MarketWatch) -- Countrywide Financial Corp., reducing costs as part of its effort to weather a credit crunch, has begun laying off employees involved in originating loans, according to a media report Sunday.

The layoffs occurred in the company's Full Spectrum Lending unit, which handles many home mortgages in a category known as Alt-A, or mortgages between prime and subprime that often involve borrowers who don't document their income, The Wall Street Journal reported in its online edition, citing a Countrywide internal email.

The email, sent to employees Friday by a Full Spectrum senior official, discussed layoffs made that day but didn't specify the number, the Journal reported.
The company as a whole employs about 61,000 people and had a sales force of about 6,800 in Full Spectrum out of a total loan-origination sales force of about 18,000 as of June 30, the Journal reported, citing a filing with the Securities and Exchange Commission.

It sounds like that might be the end of the Alt-A loan business as we knew it. Who'd have thought that lending money to people who provide no documentation on how they were going to pay it back would turn out to be such a bad idea?

Interestingly, the original story($) at the Wall Street Journal had this nugget.

An auction of about 135 foreclosed homes in San Diego Saturday provided more sobering news for mortgage lenders. Ramsey Su, an investor and former real-estate broker who attended, calculated that the high bids for the homes averaged 67% of the prices they fetched when they were last sold, mostly in 2004 or 2005. At a similar auction in San Diego in May, the average was 73%. The auction was held by Real Estate Disposition Corp., Irvine, Calif., which promotes such sales on the www.usahomeauction.com Web site. REDC officials couldn't be reached to comment.

Ouch!

Full Disclosure: No position in Countrywide at time of writing.