FirstFed Drops Wholesale, Slashes Mortgage Staff

First Federal Bank of California FSB has shut its wholesale lending operations, effective Jan. 26. In a message posted on the thrift's website and also distributed via the LendingArt Message Alert system, the company said all files received on that day would be returned unprocessed. All files not approved as of Jan. 26 would automatically be rejected. All approved files must be funded by Feb. 27, as long as they meet all of the lender's conditions. The shut down comes as First Federal's parent company, FirstFed Financial Corp., Los Angeles, reduced the staff at its thrift subsidiary by 62 persons with the cuts coming primarily from the single-family lending and commercial lending operations. FirstFed said the cuts cover 10% of the thrift's current workforce and should result in estimated annualized compensation cost savings of approximately $4.2 million. Furthermore, the Office of Thrift Supervision has issued a cease-and-desist order to the holding company and its thrift subsidiary. The order required FirstFed to submit to the OTS within 15 days a detailed capital plan to address how the thrift will remain "well capitalized" at each quarter-end through Dec. 31, 2011. If it fails to remain well capitalized, FirstFed must then submit to the OTS a detailed contingency plan to merge or liquidate the thrift.