Tuesday, 24 October 2017

Mortgage Market Woes Takes Toll on Jobs

Written by Posted On Wednesday, 05 September 2007 00:00

Nearly 88,000 financial industry workers -- 41 percent of them directly related to the mortgage sector -- have lost their jobs this year, according to the latest count by Challenger Gray & Christmas, a Chicago outplacement consulting firm.

Through Aug. 21, the company counted 87,962 financial jobs lost so far this year. And that's on top of the 100,000-plus who were let go in 2005 and 2006. Of this year's total, 35,830 were in the mortgage business.

More financial industry workers were given pink slips in April -- 33,789, to be exact -- than in any other month, the company said.

With few exceptions, the cuts are directly related to the nation's housing woes, said CEO John Challenger. More than 13,000 jobs were lost at Accredited Home Lenders, BNC Mortgage, Sun Trust, First Magnus, Countrywide and Capital One.

"The mortgage industry (has) basically told their loan officers and call centers representatives to simply stop taking calls," Challenger reported. "They basically stopped on a dime."

Challenger said there are "two big issues" behind the cuts. "First, demand for new mortgages and home equity loans and other forms of credit have fallen off dramatically. The other issue is the increasing rate of defaults and foreclosures, which is leaving the lending institutions unable to meet their own financial obligations."

The situation is worsened, he added, by the fact that other financial institutions not directly associated with housing have been investing billions in mortgage-backed securities, which has made them extremely vulnerable to the turmoil in the housing market.

The employment fallout so far this year is 164 percent greater than though the end of August 2006, the company said. And the carnage isn't limited to the financial sector alone.

Realty companies are one casualty. Real estate firms have announced 1,950 job cuts so far this year, the consulting firm reported. But that doesn't include "hundreds, if not thousands" of independent agents who have simply stopped working because there are no buyers, Challenger pointed out.

Another big victim are construction companies, which have announced 19,670 layoffs, a figure that also is underestimated because most crews are small, independent subcontractors.

The firm also is seeing job cuts in companies that provide construction equipment, materials and suppliers as well as furniture makers and other manufacturers of home furnishings, paint and household products.

"The end of the housing-related job cuts (is) by no means in sight," Challenger said. "It could be months before we reach the peak."

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