Accredited Home Lenders Holding Co said on Wednesday it has stopped taking loan applications and will cut 1,600 jobs, citing turmoil in the subprime mortgage industry.
The cutbacks are the latest for San Diego-based Accredited, which has sued Lone Star Funds to try to save its acquisition by the private equity firm for about $400 million. It was not immediately clear how the cutbacks will affect the lawsuit or merger.
Accredited said it will close substantially all of its retail lending business, consisting of 60 branches and five central support operations, by September 5, affecting 480 workers. It also plans to shut five of 10 wholesale divisions as of that date, eliminating 490 of 830 jobs.
The company also plans to cut 180 of 400 jobs at its headquarters and substantially reduce the size of its title insurance and settlement operations.
Following the cuts, Accredited said it will employ about 1,000 people, down from 2,600 as of June 30 and 4,200 at the start of the year.
Accredited said it will honor existing loan commitments and intends to resume offering loans through brokers when market conditions warrant.
These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart, Chief Executive James Konrath said in a statement.
Accredited spokesman Rick Howe did not immediately return requests for comment. An outside spokesman for Lone Star did not immediately return a call seeking comment.
Accredited shares fell 24 cents to $6.31 in pre-market trading.
(Reporting by Jonathan Stempel)