Mortgage Job Losses Surpass 40,000 Wednesday August 22, By Ieva M. Augstums, AP Business Writer
As Mortgage Industry Retrenches, Industry Job Cuts Surpass 40,000
CHARLOTTE, N.C. (AP) -- At the North Carolina offices of mortgage lender HomeBanc Corp., Archie Clark is the only employee left. But in a few days, he'll be gone, too. When Clark finishes helping movers from the company's Atlanta headquarters collect computers and other property, he'll join the more than 25,000 workers nationwide who have lost jobs in the financial services industry since the beginning of the month -- with more than half coming since last Friday.
With few exceptions, the cuts are the direct result of woes in the nation's housing market.
More layoffs are announced daily. On Wednesday, Lehman Brothers Holdings Inc. closed its "subprime" mortgage business, laying off 1,200 workers at 23 offices; Scottsdale, Ariz.-based 1st National Bank Holding Co. closed its wholesale mortgage unit and cut 541 jobs, and Accredited Home Lenders Holding Co. added 1,600 positions to the heap. The night before, banking giant HSBC said it would close a main financing office and cut 600 jobs.
Since the start of the year, more than 40,000 workers have lost their jobs at mortgage lending institutions, according to recent company layoff announcements and data complied by global outplacement firm Challenger, Gray & Christmas Inc. Meanwhile, construction companies have announced nearly 20,000 job cuts this year, while the National Association of Realtors expects membership rolls to decline this year for the first time in a decade.
It's an employment collapse that threatens to rival the massive layoffs in the airline industry that followed the Sept. 11, 2001, terrorist attacks, when some 100,000 employees lost their jobs.
"It's far from over," said Bart Narter, a senior analyst with Celent, a Boston-based financial research and consulting firm. "The subprime lending collapse will continue to ripple through the financial sector."
For five years, the nation's housing market was booming and mortgage companies grew quickly, at times offering lucrative jobs to people with little experience. But as home values declined and interest rates rose in the past year, rising delinquencies and defaults -- especially in subprime mortgages targeted at borrowers with risky credit -- have pounded lenders who couldn't keep pace.
"These kind of mortgage lenders just sprung up like mushrooms and grew like men," said John A. Challenger, chief executive at Challenger, Gray & Christmas. "They staffed up and now you have a bust."
America's largest mortgage lender, Countrywide Financial Corp., began an undisclosed number of layoffs this week. Last week, Arizona mortgage lender First Magnus Financial Corp. shut down its operations and laid off nearly 6,000 workers. On Monday, Capital One Financial Corp. said it would shutter Greenpoint Mortgage, its wholesale mortgage banking business, and lay off 1,900 employees.
"It's only been weeks," Challenger said. "These companies are acting remarkably quickly, stopping on a dime."
Andy Roach didn't foresee the turmoil when he joined Greenpoint in March. As late as June, the 25-year industry veteran thought the business of making "Alternative A" mortgage loans -- geared for those with slightly better credit than subprime borrowers -- was on a solid track.
But in July, he said, spooked investors stopped buying the securities the company sold by repackaging the loans. A little more than a month later, Capital One announced that Roach and about 1,900 of his colleagues across the country were out of a job.
"It was evident that it was serious," said Roach, 46, a regional manager in the Chicago suburb of Downers Grove. "When you can't sell the loans, when there's no market for those loans, it put us in a bad, bad situation."
Clark, 33, headed information technology operations for three HomeBanc offices in the Raleigh area. He had a feeling earlier this month that trouble was lurking, as the company began cutting back on perks and made some initial layoffs. On Aug. 9, HomeBanc filed for bankruptcy protection. They kept him on through the end of the month to collect equipment and "just go in and check on things."
"It was pretty much a free for all in the office, people taking paper, stuff HomeBanc wouldn't need," he said. "I don't feel like HomeBanc did anything. It was a perfect storm of a bad housing market."
Two of Clark's friends have already landed jobs with Countrywide. Another found work with an affiliate of First Magnus, and was almost immediately laid off again. Roach plans to open his own lending business, focusing on commercial business loans and originating home loans himself.
"The mortgage business isn't dead -- there's just going to be less people in it," Roach said.
Associated Press writers Mike Baker and Margaret Lillard in Raleigh, N.C., contributed to this
As Bolsas fecharam hoje, terça, 22/08, em alta forte. Na Nyse com baixos volumes. No Brasil com altos volumes de Petro e Vale. Mas o perigo continua.
Depois do Bear Stearns, agora o poderoso Lehman Brothers.
Transcrevo como recebi:
Lehman Shuts BNC Mortgage Unit
Wednesday August 22, 2007 20:22:00 EDT
(RTTNews) - Investment bank Lehman Brothers Holdings Inc. (LEH) said Wednesday that it is closing its BNC Mortgage LLC subsidiary as a result of the turmoil in the U.S. subprime mortgage market.
BNC Mortgage LLC issues home loans to people who cannot document their income or have shaky credit histories. BNC Mortgage was a publicly traded company till 2000 when Lehman helped finance the buyout of BNC by its management for about $47 million. Lehman took an ownership stake and by 2004 bought out management's stake. Last year BNC Mortgage was the 40th-largest U.S. mortgage lender with $13.7 billion in volume, according to U.S. Banker.
The closure will affect about 1200 employees in 23 cities and cost the company $25 million in severance, real estate and technology costs, New York-based Lehman said. The company will also record a $27 million accounting charge for writing down goodwill.
BNC Mortgage said in its Web site that it will no longer accept new loan submissions and will be returning any loan files that have not already been approved.
Lehman, however, said that it will continue to issue home loans in the U.S. through its Aurora Loan Services LLC subsidiary.
Lehman becomes the latest financial company to be affected by the U.S. subprime crisis. On Monday, Capital One Financial Corp. (COF) announced that it would close residential mortgage origination operations at its wholesale mortgage banking unit, GreenPoint Mortgage. As part of the move, the company said it will close GreenPoint's California- based headquarters along with 31 locations across 19 states. The change will result in the elimination of about 1,900 jobs. Capital One also cut its full year earnings forecast.
Accredited Home Lenders Holding Co. (LEND) earlier Wednesday said it would stop accepting new lending applications and slash about 1600 jobs in order to counter the turmoil in the subprime mortgage industry.
Impac Mortgage Holdings Inc. (IMH) announced Wednesday that it has laid off about 350 employees of its nationwide workforce.
Delta Financial also announced recently that it has cut 300 jobs, or 20% of its workforce.
Other firms to cut jobs in the past couple weeks include Bear Stearns, which announced last Wednesday that some 240 employees had been laid off. The cuts come almost a month after the firm saw two hedge funds crumble, costing co-president Warren Spector his job.
Goldman Sachs Group Inc. (GS) led a group of investors to pump $3 billion into one of its hedge funds that suffered serious losses due to the market turbulence caused by the global liquidity crunch.
Countrywide Financial Corp. (CFC), the largest U.S. mortgage lender, announced Wednesday that it has received a $2 billion strategic equity investment from Bank of America (BAC) to strengthen its balance sheet and position itself for future growth and success. Countrywide last week tapped an $11.5 billion credit line because it was facing funding difficulties.
Lehman shares closed Wednesday's regular trading session at $58.54, up $1.00 or 1.74% and gained an additional $1.17 or 2.00% in after hours trading.
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