NEW YORK, Sept 8: Countrywide Financial Corp, the largest U.S. mortgage lender, said on Friday it would cut up to 12,000 jobs, the biggest job reduction by a single company to stem from the deepening U.S. housing crisis.

The lender expects to eliminate up to 20 percent of its work force over the next three months, for a loss of 10,000 to 12,000 jobs. It said the cuts were needed because mortgage volume may decline 25 per cent in 2008 from this year’s level.

“You need to right-size the ship,” said Peter Kovalski, who helps invest more than $12 billion at Purchase, New York-based Alpine Woods Capital Investors, which owns Countrywide shares.

“They’re doing the right thing to quickly downsize. Things are going to get worse before they get better.”

Countrywide announced the cuts hours after the Labour Department said U.S. non-farm payrolls fell by 4,000 in August, the first drop in four years. The unexpected decline prompted calls for the Federal Reserve to cut interest rates before credit market turmoil drives the economy into recession.

“This current cycle is certainly the most severe in the contemporary history of our industry,” Countrywide Chief Executive Angelo Mozilo, who co-founded Countrywide in 1969, said in a letter to employees.

The U.S. mortgage industry has lost well over 50,000 jobs this year as housing demand softened, loan delinquencies and foreclosures soared, and investors stopped buying many kinds of home loans they now consider too risky.

Dozens of lenders have cut back operations or quit the industry this year. More than a dozen have gone bankrupt, including American Home Mortgage Investment Corp and sub-prime specialist New Century Financial Corp.—Reuters