US investment bank Lehman Brothers Holdings Inc said on Wednesday it was closing down a mortgage subsidiary with the loss of 1,200 jobs, citing a slowdown in subprime mortgage business.
Lehman Brothers said it would absorb charges and costs totaling US$52 million as a result of it closing down the mortgage subsidiary, BNC Mortgage LLC.
Lehman Brothers said it was continuing to offer home loans through its Aurora Loan Services LLC mortgage business.
Mortgage industry layoffs rose on Wednesday and have jumped dramatically of late as surging home foreclosures and a credit squeeze force home lenders across the US to scale back business.
Earlier in the day, Accredited Home Lenders Holding Co, based in California, announced it was cutting 1,600 jobs because of the "ongoing turmoil" sweeping the industry.
John Challenger, the chief executive of Challenger, Gray & Christmas, a private firm that monitors the US job market, said over 11,000 layoffs had been announced since last Friday, mainly at financial companies impacted by housing and credit-related woes.
"What's remarkable about these job cuts is just how quickly they've come. Many of these companies have just turned on a dime," Challenger said.
He compared the job losses roiling the mortgage industry to technology industry layoffs after the dot.com bubble burst in 2000, and other deep job cuts during the 1991 to 1992 recession.
The number of people being laid off by mortgage companies has accelerated rapidly this month.
Arizona-based First Magnus Financial, a national mortgage lender, filed for bankruptcy protection late on Tuesday after informing almost 6,000 staff they had lost their jobs.
Capital One Financial Corp, a big bank and loan company based in Virginia, said on Monday it was closing down a mortgage business it owns with the loss of 1,900 jobs.
American Home Mortgage Investment Corp, one of the country's biggest mortgage companies, announced approximately 6,000 job losses on Aug. 3 before filing for bankruptcy protection three days later.
On a smaller scale, Wall Street investment bank and broker Bear Stearns cut 240 positions in its mortgage business this month, while Countrywide Financial, the US' biggest mortgage firm, is also trimming its headcount.
But Challenger said there could be a silver lining in the cloud for laid-off workers, noting that mortgage firm layoffs are spread across the US and are not hitting just one city or state.
"Unemployment has been steady at between 4.4 and 4.6 percent for almost a year now ... near full employment which will help to absorb these job losses," he said.
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