Capital One to close mortgage unit
Last Updated: Monday, August 20, 2007 | 6:05 PM ET
The Associated Press
Capital One Financial Corp. said Monday it will close its wholesale mortgage unit due to woes in the secondary mortgage markets, resulting in $860 million US in charges in 2007.
The company, which said about 1,900 positions would be eliminated due to the closing of the unit, added it will "cease residential mortgage origination" at the unit, called GreenPoint Mortgage, effective immediately.
"The reductions in demand and pricing in the secondary mortgage markets make it difficult to operate our wholesale mortgage banking business profitably," said Gary Perlin, Capital One's chief financial officer.
The company said GreenPoint will stop making new loan commitments, but it will continue to meet its contractual obligations to customers for loan commitments with locked rates that are already in the pipeline.
Capital One said it will incur charges of about $2.15 US per share, for closing the division. Most of the charges will be included in the 2007 results. As a result of the charges, the company said, it now expects earnings per share of $5 US for the year.
Analysts polled by Thomson Financial expect earnings of $7.05 US per share. Analysts estimates typically exclude one-time charges.
Capital One shares fell $2.03 US to close at $66.72 US on the NYSE. News of the mortgage unit's closure came after the market closed Monday.
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