Brother, Can You Spare A Housing Job?
House prices weren't the only things on the uptick over the last few years, the number of people that moved into housing related jobs also soared. For the last few years it seemed that the answers to the massive job loss following the dot com bubble and the attacks of 9/11 were to be found in the housing industry. Just as in past periods of irrational exhuberance, when the most unlikely people were found peddling stocks, trading bonds, and getting money for start-ups, the housing bubble brought it's own share of get rich quick stories. The overnight RE gazillionaire, the woman who made a bundle flipping houses, the kid from Quiznos' who started writing mortgages, or doing appraisals...or I could go on.
Well, the gravy train has finally de-railed and many of those who found themselves eager participants in the pile on are now piling on to the unemployment line.
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."
This job loss train wreck is not slow motion by anymeans. These mortgage lending companies are folding their tents faster than a snake-oil salesman with a tar and feather toting mob on his tail.
"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."
It's called leaving town one step aheade of the sheriff, with a smidge of the evacuation from our embassy in Saigon thrown in for good measure.
"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.
That's sort of like transfering by dinghy from the Titanic to the Andrea Doria.
And, it's not just the mortgage lenders who may be seeing some job losses. This news story today reveals that four top banks hit up Uncle Sam for some WAM this afternoon, to the tune of 500 million each. seems they had a few bucks in Countrywide themselves. In fact they funneled about 2 Billion bucks into Countrywide jjust today. So lemme see, they're borrowing money from the Fed to put into Countrywide????!!!
In a joint statement, the latter three banks said they decided to borrow the money to demonstrate "the potential value of the Fed's primary credit facility" and encourage its use by other banks.
"Simultaneous action by these four institutions -- at the same time, on the same day, for the same amount of money -- suggests that the move is intended to have some symbolic value," said Aaron Gurwitz, co-head of portfolio strategy at Lehman Brothers Investment Management Division. "But it may also be a way for them to make money."
Yeah. That too.