BNC Mortgage Unit Shut By Lehman - 1200 Job Cuts!

Lehman Brothers
[This post is written and copyrighted by FIRE Finance (]

Today Lehman Brothers said that it's shutting its subprime-mortgage unit BNC Mortgage LLC and firing 1,200 people, becoming the latest company to stop offering home loans to less-creditworthy borrowers. According to an industry publication Inside B&C Lending, BNC was a top-20 subprime mortgage lender in 2006, originating more than $14 billion worth of home loans.

These 1,200 jobs would go in 23 locations which would cost it about $52m in charges. Lehman said in a statement:
"Market conditions have necessitated a substantial reduction in resources and capacity in the subprime space."
So far more than 50 lenders have already gone bankrupt. Investors in the secondary mortgage market have stopped buying securities backed by subprime loans. A snapshot of how the mortgage jobs are evaporating is shown below:

Company __________________Job cuts
American Home Mortgage _______7,000
Accredited Home Lenders _______1,600
Ameriquest_________________ 3,800
Bear Stearns _________________240
Capital One _________________3,900
Countrywide _________________500
Delta Financial ________________300
Fifth Third ___________________650
First Magnus ________________5,950
First National Bank Holding Co. _____351
HSBC _______________________600
IndyMac ____________________400
Lehman Bros. ________________1,200
Mortgage Lenders Network _______900
New Century_________________5,200
Novastar _____________________500
ResCap (GMAC) ______________1,000
SunTrust ___________________2,400
Washington Mutual ___________10,000
WMC Mortgage (GE) _____________771


The melt down of the subprime mortgage businesses has engulfed approximately 47000+ jobs! There might be more layoffs and company closures in the pipe line.

In the economy usually when one sector suffers, there is a domino effect. We observed this phenomenon when the tech bubble burst. Hopefully the situation is better this time with no widespread domino. Else who knows, 2008 might see the US economy battling with recession!


Related Posts