FINANCE Mortgage industry braces for cuts

About 65,000 employed in mortgage lending stand to lose their jobs.
LOS ANGELES TIMES
With much of the steam out of the refinancing market, the mortgage financing industry is bracing for widespread layoffs.
Two of the biggest home-loan providers -- Washington Mutual Inc. and Countrywide Financial Corp. -- have cut more than 6,500 jobs in recent months. And lenders are preparing to cut thousands more jobs in the coming months.
In all, some 65,000 people employed at companies specializing in mortgage lending will probably lose their jobs over the next 12 months, the national Mortgage Bankers Association says.
That represents about 15 percent of the peak employment in late summer, when 435,000 workers were processing home loans as borrowers scurried for fear of missing out on historically low mortgage rates. The association's estimate doesn't include jobs at banks that don't have separate mortgage subsidiaries, and there was no breakdown of the data by states.
But there's no question that California in particular has a lot riding in this industry. Data from the state's employment development department show that employment in the two sectors that include mortgage lending and brokerage services jumped 18 percent between 2000 and 2002, to 110,200. And they've kept adding workers this year even as overall employment has fallen slightly.
Companies' reports
Last week, Seattle-based Washington Mutual, the nation's second-largest mortgage lender, said more than 2,000 home-loan staff members -- mostly temporary and contract positions -- would be cut, in addition to the 4,500 workers let go since August.
The company said it expected its mortgage volume in the fourth quarter to fall by 50 percent from the third quarter. Reflecting that downturn, Washington Mutual Chief Executive Kerry Killinger reduced earnings estimates for the year to $4.15 to $4.25 a share, down from earlier earnings projections of $4.43.
Calabasas, Calif.-based Countrywide Financial also has been slimming down as refinancings have faded. The company has cut about 2,200 jobs -- in loan originations and closing services -- since mortgage employment peaked in July at more than 22,000 workers, spokesman Rick Simon said.
Wells Fargo & amp; Co., the nation's largest mortgage lender, declined to comment about its employment plans. "At any given time, we may be reducing staffing levels in one area but adding in another," the San Francisco-based bank said in a statement.
According to the Mortgage Bankers Association, total mortgage originations are expected to hit a record $3.4 trillion this year, up 35 percent from a year ago. Refinanced mortgages account for about 60 percent of that total, or more than $2 trillion.
Next year, the association predicts that the mortgage loan volume will fall by half, to $1.6 trillion, with refinancings making up only 28 percent of the total.
"We've never seen a refi boom as dramatic as the one that's coming to a close now, never in the history of the planet," said Charlotte Chamberlain, an analyst with Jeffries & amp; Co. who tracks Countrywide and E-Trade Financial Corp., among other companies.
As was the case with E-Trade, which in August gave pink slips to 163 employees, most of the downsized workers in the industry thus far have been temporary or contract hires. Even if specialty mortgage companies eliminate 15 percent of their staff members as projected, employment overall will still be about 370,000 -- 50 percent more than their payrolls during the 1993-94 refinancing boom, according to the Mortgage Bankers Association.