Subprime Mortgage Crash Hurts More than Just Borrowers
While controversy rages about whether the subprime mortgage foreclosure crisis sweeping the country is the result of unethical practices in the mortgage industry or poor judgment on the part of borrowers, one clear reality can't be ignored: a lot of people are getting hurt by the mortgage foreclosure crisis who never took out a high-rate, adjustable loan in their lives. Those people include home sellers, investors who are taking losses on properties as homes sit unsold for months due to the glut in the market, and economies impacted by the virtual collapse of the subprime mortgage industry.
In April, GE's WMC Mortgage unit laid off 771 employees--half of it's remaining staff. WMC's staff had already been cut by 460 employees in March.
These layoffs are just one recent example of the drastic cuts in the mortgage industry over the past year. In May, subprime mortgage lender New Century Financial Corp. announced the elimination of 2,000 positions. The company had already announced 3,200 terminations when it filed for bankruptcy protection two months earlier.
Other recent notable mortgage industry layoffs include a oss of approximately 3,000 jobs from ACC Capitol Holdings and the elimination of an undisclosed number of the 2,400 positions at Freemont Investment & Loan.
Each of these layoffs not only impacts hundreds or thousands of families, but raises local unemployment rates, aggravating economic difficulties for entire areas.