Irvine-based subprime lender BNC Mortgage Inc. is being shut down, according to parent company Lehman Brothers Holdings Corp.
About 1,200 workers will lose their jobs due to the closure, Lehman Brothers announced on Wednesday. BNC employed about 400 people in its Irvine office as recently as last year.
Lehman bought BNC, which funds subprime and slightly less risky Alt-A loans brought to it from brokers, in 2004. It had announced another 500 layoffs in June.
It’s the latest sign of contraction for the local subprime mortgage sector, which is heavily rooted in Orange County. BNC made about $2 billion of loans in the first quarter of 2007, down 40% from a year ago.
“Market conditions have necessitated a substantial reduction in its resources and capacity in the subprime space,” New York-based Lehman Brothers said in a statement.
Shutting down BNC will cut Lehman Brothers’ third-quarter earnings by $52 million.
