The battered residential mortgage market and slumping housing sector are claiming victims left and right these days, and this region is feeling some of that pain.

The latest news comes from McLean, Va.-based Capital One Financial Corp., which is ceasing operations at its wholesale mortgage-banking unit, GreenPoint Mortgage Funding Inc., resulting in the elimination of 1,900 positions.

Capital One will close GreenPoint's Novato, Calif., headquarters along with 31 locations across 19 states. In this region, the cuts will affect 40 employees in Fairfax, 30 employees in Silver Spring and 30 workers in Owings Mills.

The vast majority of the 1,900 layoffs will take place by year's end.

The GreenPoint cuts follow an announcement in late June when Capital One said it would chop off about 2,000 jobs to reduce operating expenses and remain competitive.

GreenPoint Mortgage Funding focuses on jumbo loans above $417,000 and loans to borrowers who do not fully document their income or assets.

In recent years, these types of loans have helped fuel a boom in the residential housing sector, but as that market has slowed down investors have shied away from such loans, causing mortgage shops to go out of business or be sold and home buyers to default at a higher clip.

"The reductions in demand and pricing in the secondary mortgage markets make it difficult to operate our wholesale mortgage banking business profitably," said Capital One CFO Gary Perlin in a statement.

Some analysts say they weren't surprised by Capital One's decision to shutter GreenPoint.

"Given management's previous comments regarding the challenging mortgage market for the foreseeable future and difficulty in turning GreenPoint into an 'endgame' player, we believed GreenPoint's days were numbered, barring a dramatic turnaround in the mortgage market," analysts at Arlington, Va.-based Friedman, Billings, Ramsey & Co. Inc. wrote in a report Tuesday.

GreenPoint will stop making new loan commitments immediately but will continue to meet its contractual obligations to customers for loans that are in the pipeline with rates locked, Capital One said in a statement.

Capital One estimates it will record an after-tax charge associated with the closure of about $860 million, most of which will be incurred this year. The company is lowering its 2007 earnings guidance by $2.15 per share, to $5 per share.

Capital One acquired GreenPoint last year as part of its $13.2 billion purchase of Melville, N.Y.-based North Fork Bancorporation. In 2005, Capital One paid $4.9 billion for New Orleans-based Hibernia Corp. Those two deals helped transform Capital One from a financial-services company and credit-card provider into a full-fledged banking institution with more than 700 retail bank branches.

Capital One Home Loans, based in Overland Park, Kan., and Capital One N.A. -- which has 750 bank offices in New York, New Jersey, Connecticut, Texas and Louisiana -- are not directly affect by the decision to close GreenPoint.

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