Capital One, the American credit-card issuer, has become the latest victim of the current mortgage market turmoil, after last night announcing it would close its wholesale mortgage business.

The 31-branch GreenPoint Mortgage business, which specialises in offering so-called “Alt-A” mortgages, which do not require the borrower to provide income or asset details, will close with the loss of 1,900 jobs - about 6 per cent of Capital One's total workforce.

Capital One blamed the poor outlook for the mortgage industry and the increasing difficulty of raising funds to make new loans.

GreenPoint lends money to housebuyers, then packages the loans and sells them on to investors.

Gary Perlin, Capital One’s chief financial officer, said weaker demand and pricing in the secondary mortgage markets had made it “difficult to operate our wholesale mortgage banking business profitably”.

The group said it would book a one-off $860 million (£432 million) charge to cover the closure. It also reduced its earnings guidance by $2.15 to $5 as a direct result of the unit closure.

The move comes less than a year after the group took control of GreenPoint as part of a deal to buy North Fork Bancorporation.

Meanwhile, Countrywide Financial, America’s largest lender, sought to reassure customers it is safe to do business with the company, amid reports that the company is cutting 500 jobs to help cope with credit crunch fears.

The company took full-page advertisements in US newspapers to tell readers that mortgage market problems do not affect the safety of federally insured deposits at its Countrywide Bank unit, which it said was well capitalised.

Countrywide's move came as KKR Financial, the Kohlberg Kravis Roberts affiliate, revealed it could take a $200 million hit from mortgage bond-related losses. The group said it had recently sold $5.1 billion of residential mortgage assets and interest rate swaps, resulting in losses of $40 million.

Separately, Thornburg Mortgage gave warning that it would report a $930 million loss in the third quarter of the year, on the sale of mortgage-backed bonds. The lender said it had sold $20.5 billion of mortgage-backed securities to improve its finances.

Meanwhile, a fund managed by Solent Capital Partners, the UK hedge fund group, said it could be forced to sell assets because it has been unable to raise short-term funding. The Mainsail II fund invested in US residential mortgage-backed debt.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive