ASSOCIATED PRESS

Countrywide Financial Corp. said Friday it will cut as many as 12,000 jobs as it struggles to deal with challenging conditions in the mortgage industry.

The company said the cuts, amounting to as much as 20 percent of its work force, are needed because it expects new mortgages to fall about 25 percent in 2008 from this year’s levels.

“We are taking decisive action to ensure that Countrywide continues to be well-positioned for further success,” said Angelo Mozilo, chairman and CEO.

In recent weeks, the company borrowed $11.5 billion and sold a $2 billion stake to Bank of America so it could keep operating its retail banking and mortgage lending businesses.

The Calabasas-based company said it intends to keep transferring its residential lending business into its Countrywide Bank unit as a way to strengthen its access to funding.

Almost all of its residential lending activity will be originated through the bank by the end of this month, the company said.

The latest cuts followed the elimination of about 900 positions earlier this week and 500 others last month.

The company employs about 60,000 people, with about 34,000 working in loan production.

Countrywide has been struggling as the housing slump led to a sharp rise in mortgage defaults and foreclosures, particularly among borrowers with subprime loans.

Like other lenders, Countrywide has tightened its credit guidelines and stopped selling some types of adjustable rate loans.

“As we carry out our plan, the company’s overarching focus is exactly where it has always been: to remain an industry leader in the U.S. residential lending business,” Mozilo said in his prepared statement.

Countrywide shares fell 27 cents to $18.21 on Friday. In after-market trading, shares rose to $18.40. –ajc.com