The mortgage meltdown has claimed yet another casualty, as Capitol One announced it is shuttering its GreenPoint Mortgage wholesale lending unit. GreenPoint will close all 31 of its branches in 19 states, and its headquarters in California, Capital One said.

The McLean, Virginia-based lender also announced it was cutting 1,900 jobs across the board in an effort to cut costs. Capital One had already announced its plans to cut 2,000 jobs earlier in the year.

Capital One bought GreenPoint Mortgage for $13.2 billion in 2006, at the tail end of a five-year housing boom that saw record home prices and loans across the country. The closing of the unit will cost Capital One $860 million after taxes, according to the company.

Although Wall Street was expecting better trading today due to positive reports from retailers, the financial markets still showed nervousness in the face of another example of the mortgage meltdown's ripple effect across the global economy.

Lenders who specialized in "creative" and "nonconforming" loans with higher interest rates and steep payment increases have been downsizing or declaring bankruptcy in droves, leading to a global "credit crunch" as the markets pull back from lending and consumers stop borrowing.

In Capital One's case, the GreenPoint mortgage unit specialized in "jumbo" mortgages that went well beyond the limits approved by government-backed lenders such as Fannie Mae and Freddie Mac.

Capital One specifically targeted borrowers classified as "alternative-A" or "Alt-A," who had credit scores higher than those typically in the subprime lending bracket, but not quite good enough to qualify for prime lending interest rates.

Alt-A borrowers accounted for 15 percent of all new mortgages in the first half of 2007.

No Stranger To Strange Practices

Capital One's focus on "alternative" lending practices isn't limited to its mortgage dealings. For many years, the company refused to report the available credit limits of cardholders to the credit bureaus, in order to keep customers who may have gotten better interest rates elsewhere stuck with their Capitol One card.

The omission of credit limits would prevent lenders from knowing how much credit the borrower was using, depressing their credit scores and reducing their ability to qualify for better loans and rates.

Capital One recently agreed to start reporting its borrowers' credit limits to the bureaus, but simultaneously raised the interest rates on many accounts, enraging longtime customers who were promised fixed interest rates for the life of their credit card balance. has been flooded with complaints regarding the sudden interest rate hikes and general bad customer service of Capital One.

The company is notorious for blitzing consumers' credit reports with inquiries in search of new customers, and time will tell if it chooses to follow a similar path back into the lending business once the mortgage meltdown comes to an end.