A boom in lending jobs, especially for buying homes or refinancing them, played a major role in the county’s employment growth during the past five years.
But now that job sector is leading a decline.
The county counted a loss of about 4,000 jobs in finance during the past year, mostly from mortgage companies going out of business and downsizing.
With limited job prospects in the sector, economists have forecast flat employment for the county.
“We don’t want to see things get so weak that job growth goes below zero,” said Chapman University economist Esmael Adibi.
The easy credit that allowed for a boom in mortgage financing has given way to a credit crunch, which has shaken out many mortgage brokers who were hired during the boom years.
About 10%, or 134,000, of the county’s 1.5 million jobs are in the finance sector. This includes workers at banks, insurance companies, real estate finance and other lending companies.
From 2001 to 2006, overall county jobs grew an unprecedented 30%, driven mostly by a boom in construction and finance jobs, according to Adibi.
Because no major increases are expected in other jobs, overall job growth in the county is expected to be flat, Adibi said. Smaller companies and startups should help offset some of the losses from the mortgage industry to keep the unemployment rate around 4%.
Orange County’s unemployment rate was 4.2% in August, up from 4.1% in July and 3.9% in June, according to the state’s Employment Development Department.
A year earlier, the county’s unemployment rate was 3.6%.
The number of laid-off financial workers continues to increase.
Most recently, Lehman Brothers Holdings Inc. announced it would lay off as many as 450 workers at its BNC Mortgage LLC in Irvine.
The busts of big-name lenders such as Irvine-based New Century Financial Corp. and Orange-based ACC Capital Holdings Corp. have accounted for a substantial amount of the carnage with their county layoffs estimated in the thousands between the two.
The total amount of jobs lost is probably higher than recorded since a large number of self-employed financial workers weren’t included in the government’s payroll statistics, according to Adibi.
“No one is sure how many mortgage brokers were self-employed, but the number is significant,” he said.
The California Department of Real Estate reports the number of lending licenses it issues and renews statewide also is expiring at a record rate.
For the 12 months ended in June, the department said 17,400 holders allowed their licenses to expire. That is a sharp increase from about 12,000 expired licenses in 2006 and 7,700 licenses in 2005.
Despite the pullback, the long-term outlook for finance jobs in the county is bullish.
The government has estimated that there will be a 17% increase in financial jobs from 2004 to 2014.
And yes, loans still are being made.
HelpUFinance Inc. in Santa Ana says its home lending business has slowed, but it’s taking advantage of the market.
“Investors are leaving the market, which makes less competition for us,” said Donald Royer, chief legal officer.
Royer also says his firm has been receiving hundreds of applications from out-of-work mortgage brokers, and has been able to choose from a “pool of very talented people.”
Much of the firm’s business has turned to arranging loans for the Department of Housing and Urban Development, which helps provide for lower-income families.
