Bear Stearns Mortgage - Wholesale & Retail

Update - 2008-03-13: We just heard the EMC division (Correspondent) was given notice. According to the email we received "Some have until to work until May 30th to receive small severance." The tipster said "They have roughly 30 people left plus some sales staff. That said, that will kill the Conduit and Correspondent division for Bear and look for BSRM to be right behind this."

Also notable in the news today, Bear Stearns (BSC) shares took a dramatic hit on the news about Carlyle Capital's impending collapse. MarketWatch reports:

"The Carlyle default has ramped up the worries in the market that nobody is too big to fail," OptionMonster.com's Jon Najarian wrote in a market update for clients.

"Those that are being hit hard include Bear Stearns. ... Other brokers and i-Bankers are likewise feeling the pain, but that pain is most evident in Bear, where over 140,000 puts have changed hands in the first 90 minutes of trading," he said.

Original Listing - 2008-01-16: We've been following goings on at Bear Stearns Residential Mortgage Corp., a wholly owned subsidiary of Bear Stearns Companies, since we reported on the gobbling up of Encore Credit. Losses suffered from mortgage-related activities and imploding hedge funds have cost BSC dearly and triggered the ouster of CEO James Cayne, replaced by President Alan Schwartz. That makes it the 4th company to do so in as many months.

Layoffs have been an ongoing saga that ended with many folks being displaced with the closure of operations in Irvine, CA. There have been additional cuts at the Scottsdale AZ home office, and other branch closures. According to Reuters:

"Bear Stearns, a Wall Street investment bank said it would cut 240 subprime lending jobs, including 100 at its Encore Credit unit and 140 at its Bear Stearns Residential unit. The company also said it would close two operations centers."

There were approximately 1500 employees at the beginning of 2007, but reported cuts now total in excess of 650. Exact numbers could not be verified, but of the four remaining locations shown on CityTownInfo only the AZ office remains in operation (the TX branch is EMC Loan Servicing).

We use the term 'layoffs' loosely here. Former employees found the news releases hardly amusing. Bear Stearns came out with a statement for newspapers that employees would get severance, and we got emails stating it was a lie. This viewpoint was shared in our November Premium newsletter; here's a quote from a former employee:

"What upset myself and others that were let go was the fact that a memo circulated throughout the company and quoted from in the various media sources said and I quote "Employees affected would get severance, benefits and outplacement services". We employees with the mortgage side were offered NOTHING!! We have all of 2 days to replace our medical insurance or be forced to accept COBRA as well as NO severance."

It is perhaps best summed by this quote from a recent article in The Australian:

"Bear Stearns's mortgage business, a big driver of profits, has been eviscerated."

If you can provide more info email us please. This story may not have a happy ending.