The Bloodbath in The Mortgage Industry Continues

Countrywide Cuts Foretell Loss of U.S. Mortgage Jobs

The worst U.S. housing slump in 16 years may lead mortgage companies to eliminate almost 100,000 jobs, more than double the number already cut this year.

As many as 20 percent of the nation's real estate loan officers and mortgage brokers will be fired, according to Josh Rosner, managing director at the New York investment research firm Graham Fisher & Co. That's in addition to the 10 percent reduction from December to July that thinned their ranks to 450,000 as investors stopped buying mortgages and lenders curtailed financing to avoid rising subprime defaults.

``Originations are going to decline dramatically,'' Rosner said. ``We are just at the front-end of seeing the large banks and investment banks start to cut their capacity.''

Countrywide Financial Corp. said Sept. 7 it will cut 10,000 to 12,000 jobs. Lehman Brothers Holdings Inc., the biggest underwriter of mortgage-backed bonds, and IndyMac Bancorp Inc., the second-biggest U.S. home-loan company, also announced job reductions last week.

At least 100 mortgage companies have sought buyers or halted lending since the start of 2006, according to data compiled by Bloomberg. A record number of Americans faced foreclosures in the second quarter, the Mortgage Bankers Association in Washington reported last week.

The housing bubble didn't just burst, it exploded all over the whole economy and will have chilling effects on many industries. Unfortunately the pain is just starting and could get a whole lot worse before it gets better.