Bear Stearns Cuts 240 Mortgage Jobs, Person Says
By Christine Harper
Aug. 16 (Bloomberg) -- Bear Stearns Cos., the second-largest underwriter of mortgage bonds, is cutting about 240 jobs at two home-lending units because of a decline in demand, said a person with direct knowledge of the matter.
Encore Credit, based in Irvine, California, is eliminating 100 positions, and the Bear Stearns Residential Mortgage Corp. division in Scottsdale, Arizona, is reducing its workforce by 140, said the person, who declined to be identified because the number of jobs isn't being released publicly.
``In the normal course of business Bear Stearns Residential Mortgage Corp. and Encore Credit evaluate market conditions and staffing levels in an effort to identify areas where we can eliminate redundancies and improve the efficiency of our operations,'' the New York-based firm said in an e-mailed statement today. ``As a result we have made the decision to reduce our staffing levels and close two operation centers.''
The statement didn't include the number of jobs that were cut, and a Bear Stearns spokeswoman, Renu Aldrich, declined to elaborate.
Bear Stearns is the nation's 12th-largest home lender, according to Inside Mortgage Finance. The company, the fifth- biggest U.S. securities firm, ranks second after New York-based Lehman Brothers Holdings Inc. among U.S. sellers of mortgage bonds.
Lenders across the country are providing fewer mortgages as the housing-industry slump deepens. U.S. home prices will fall this year, the first annual decline since the Great Depression of the 1930s, according to the National Association of Realtors, based in Chicago.
Bear Stearns also said the job cuts reflect the installation of a new computer system that ``enables us to more efficiently serve our customers from a central location.''
The firm's shares have fallen 28 percent this year, after a plunge in the value of mortgage-backed debt forced two of its hedge funds into bankruptcy. The Standard & Poor's 500 Financials Index has declined 10 percent.
Chief Executive Officer James Cayne ousted Richard Marin, who ran the fund unit, as well as Co-President Warren Spector, who oversaw trading and asset management.
Bear Stearns shares jumped $13.29, or 13 percent, to $116.44 at 4 p.m. in New York Stock Exchange composite trading. It was the stock's biggest gain since October 1998 and reflected speculation that the company will raise money from an investor.
``There are rumors around that there is a rescue financing coming in for some of the financials, particularly for Bear Stearns,'' said Barton Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC.
Bear Stearns is in talks to sell a minority stake to China's Citic Group, Forbes Magazine reported on Aug. 9. Aldrich, the Bear spokeswoman, declined to comment.
To contact the reporter on this story: Christine Harper in New York at email@example.com .
Last Updated: August 16, 2007 18:18 EDT
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Bear Stearns Residential Mortgage Corporation
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