Thousands Lose Jobs Because of Mortgage Problems

Aug. 22, 2007 — -- Mortgage brokers and real estate agents are starting to lose their jobs -- the latest casualties from the nation's mortgage problems.

Since the start of August, nearly 21,000 workers in the mortgage and lending industry have been fired, according to Challenger, Gray & Christmas Inc., a consulting firm that tracks job-cut announcements.

More than half of those job cuts came in the last week alone as First Magnus Financial Corp., Countrywide, Capital One and the lending unit of Bear Stearns all laid off workers because of the problems in the credit markets.

HSBC today announced it will cut 600 jobs when it closes its finance office next year. That comes right after Accredited Home Lenders announced layoffs, cutting 1,600 of its 2,600 jobs. Both cuts came after the report from Challenger, Gray & Christmas.

Those selling homes are also feeling the pinch.

The National Association of Realtors expects membership rolls to decline this year by more than 4 percent. There were nearly 1.4 million realtors in 2006, but this year the association expects to have just 1.3 million members. It would be the first membership drop in a decade.

California expects to see a 7 percent drop in realtors and Florida is predicting a 4.3 percent decline.

The industry had seen tremendous growth in the last decade, doubling the number of agents from just 716,000 in 1997.

"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," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

"Last week, mortgage lenders basically told their loan officers and call center representatives to simply stop taking calls," Challenger added. "They basically stopped on a dime, which means that thousands of call center workers, data processors, administrative staff, etc., are sitting idle."