Missed WMC Layoffs
Chuck Ponzi March 21st, 2007
So far, the pain has been felt around the world in Subprimes.
I try to catch all of them in Southern California. This is because much of our booming economy has rested on real estate and lending. SoCal is the grand central station of mortgage lending; much of the world’s transactions pass through here.
Bloomberg reported some time ago about WMC Mortgage’s subprime unit slashing its workforce.
General Electric Co.’s U.S. mortgage unit will curtail lending and fire 460 workers, or 20 percent of staff, amid a rise in defaults by people with poor credit.
GE’s WMC Mortgage, the fifth-biggest subprime lender in the U.S., this week stopped making mortgages without down payments or to borrowers with credit scores below 600. WMC last year had $33 billion in new loan volume, according to industry newsletter Inside B&C Lending.
“We’ve realigned our resources to fit the size of the market,” said Brandie Young, a spokeswoman for Burbank, California-based WMC. The lender is adjusting underwriting policies amid a “fluid market,” she said.
Burbank is off the beaten path for mortgage lenders, but that many jobs can create problems in the short term. Longer term, migration patterns will likely happen because of it. Anyone who still thinks that our economy is booming in SoCal and we are immune to a slowdown need only look at our archives of the past 3 months and at the ml-implode.com site to see that over 40 lenders have imploded since the beginning of the year.
This has all happened so fast that I think people are still in denial about the impacts. It will take a bit of time for the severance to be spent, but many of these people are going to be in a real jam. Even if they find other jobs, is the pay going to be as good? I doubt it. It isn’t like these jobs are moving, they are being eliminated. When many of these people are let go, they won’t have anywhere to go. It will be interesting to watch the unemployment figures in OC over the next couple of months.