WaMu, hurt by mortgage crisis, cuts 1,200 jobs

updated 4:35 p.m. ET June 19, 2008

SEATTLE - Washington Mutual Inc., the nation’s largest savings and loan, said Thursday it slashed 1,200 jobs — about 2.6 percent of its workforce — as part of a plan to cut costs and become profitable again.

WaMu, staggering under the rising cost of delinquencies and foreclosures, said in a statement that the layoffs were made in three areas: home loans, jobs not tied to “mission-critical activities,” and positions lost as the company centralizes support functions.

The home loans layoffs come a day after WaMu announced it would no longer extend “option” adjustable rate mortgages, which offer very low introductory payments and let borrowers defer some interest payments until later years. But that interest adds up, and homeowners who only make minimum payments can end up owing more than they borrowed.

Before Thursday’s announced cuts, WaMu had 45,883 employees.

The cuts follow an earlier, more devastating round of layoffs as WaMu acknowledged the severity of the subprime mortgage crisis. In December, the Seattle-based thrift slashed more than 3,100 jobs as it shuttered its subprime lending business, closed home loan centers and pared down corporate and support ranks.

WaMu lost more than $1.1 billion in the first quarter of this year, and announced in April it would take a $7 billion cash infusion from private investors.

The company said eligible laid-off employees who don’t find other jobs inside the company will receive severance and job placement assistance.

Shares of the thrift edged up 9 cents, or 1.4 percent, to close Thursday at $6.35.

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