Job losses mount at battered lenders

CHARLOTTE, N.C. — At the North Carolina offices of mortgage lender HomeBanc, Archie Clark is the only employee left. In a few days, he'll be gone, too.

"It's pretty much a ghost town over there," Clark said. "Somebody went in and took the furniture from the lobby. I don't know who did that. I put some of the other stuff in the back and locked it up."

When Clark finishes helping movers from the company's Atlanta headquarters collect computers and other property, he'll join more than 25,000 financial-services workers nationwide who have lost jobs 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.

Wednesday, Lehman Bros. closed its "subprime" BNC Mortgage business, laying off 1,200 workers at 23 offices, including one in Tukwila. It is the only BNC office in Washington state.

Late Wednesday, Delta Financial said it will cut 300 jobs, or 20 percent of its work force, mostly in Florida, Texas and California

Also Wednesday, Scottsdale, Ariz.-based 1st National Bank closed its wholesale-mortgage unit and cut 541 jobs, Accredited Home Lenders added 1,600 positions to the heap, and California-based Impac Mortgage said it fired about 350 employees.

Tuesday night, 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 layoff announcements and data complied by global outplacement firm Challenger, Gray & Christmas.

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 after Sept. 11 when some 100,000 employees lost their jobs.

"It's far from over," said Bart Narter, a senior analyst with Celent, a 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 climbed 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 Challenger, chief executive at Challenger, Gray & Christmas. "They staffed up, and now you have a bust."

America's largest mortgage lender, Countrywide Financial, began an undisclosed number of layoffs this week. Last week, Arizona mortgage lender First Magnus Financial shut down its operations and laid off nearly 6,000 workers.

Monday, Capital One Financial 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, 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. It kept Clark 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 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 loans and originating home loans himself.

"The mortgage business isn't dead — there's just going to be less people in it," Roach said.

Seattle Times business reporter Bibeka Shrestha and Associated Press reporters Mike Baker and Margaret Lillard in Raleigh, N.C., contributed to this report.