From the Morning Call online:
Hangover starts after real estate bender
Brad Cottrell was a paramedic when a friend introduced him to the high-rolling world of high-interest mortgage lending.
Within three years of landing a job with Ownit Mortgage Solutions Inc. in Agoura Hills, Calif., his salary had tripled. His wife quit working, and they bought a 3,000-square-foot house in Camarillo, about an hour northwest of Los Angeles.
But late last year, defaults on risky loans began to rise. By December, Ownit was out of business, and the 35-year-old father of three was out of a job.
”It was a nightmare,” he said. ”I felt like I got hit by a Mack truck.”
There’s a lot of that going on. When New Century Financial Corp. of Irvine, Calif., on Monday became the latest mortgage company to file for bankruptcy protection, it handed 3,200 employees their walking papers. In California, mortgage industry job losses soared 367 percent in the first quarter.
”It’s only going to get tougher,” said Cottrell, whose house is now for sale. ”This is the real hardworking time.”
…
Nationwide, job losses in the category that includes mortgage lending, real estate and construction climbed 346 percent in the first quarter, to 21,245 from 4,764 in the same period last year, according to outplacement firm Challenger, Gray & Christmas Inc.”It’s a whole sector of the economy that’s leaking,” Chief Executive John A. Challenger said.
When considered individually, though, the loss of a higher-paying white-collar position can be more significant for the economy.
”Each one of these finance jobs is worth at least two construction jobs,” said Ryan Ratcliff, an economist with the University of California, Los Angeles’ Anderson School of Business.
…
”We went on a big real estate bender,” Ratcliff said. ”And this is sort of the beginning of the hangover.”