MORE TO COME
Mortgage Industry Set for New Round of Job Cuts Amid Higher Rates
By MATHEW PADILLA
The bleeding isn’t over for the mortgage industry.
Job cuts have spread from mortgage companies refinancing home loans to title insurers that issue policies for new mortgages.
William Foley, chief executive of Fidelity National Financial Inc., said his company likely will let go 1,500 to 2,000 workers by year’s end. That comes on top of 2,800 layoffs, or 14% of Fidelity’s workforce, done in August and September.
“The slowdown is there,” Foley said. “It’s happening. We are now back to a more traditional housing market.”
Fidelity National is moving its headquarters from Santa Barbara to Jacksonville, Fla. The company’s Fidelity National Title unit is based in Irvine. With other offices in Orange County, Fidelity employs about 500 people here.
So far, Fidelity’s layoffs largely have been outside the county, according to Foley.
Fidelity and Santa Ana-based First American Corp. dominate the title market. First American recently said it plans to cut 2,000 jobs, or 7% of its workforce, by year’s end.
A First American spokesperson said the job cuts are a result of consolidation of newly acquired businesses and likely won’t impact OC.
Not everyone is just cutting jobs outside the county.
In September, Huntington Beach-based E-Trade Mortgage Corp., part of Menlo Park-based E-Trade Financial Corp., said it let go 163 workers.
Michael McCarthy, general manager of GMAC Mortgage Corp.’s Ditech.com in Costa Mesa recently said his company has “adjusted our workforce according to the change in the marketplace.”
He declined to give a number of job cuts.
If interest rates continue to rise, McCarthy said Ditech is prepared to cut jobs in the fourth quarter. But if rates fall, Ditech may add staff, he said.
Mortgage rates hit bottom in July and have risen since with ups and downs in-between.
Other mortgage companies here are rumored to have shed jobs, including Irvine’s Greenlight Financial Services Inc. and InstaFi.com, also based in Irvine. Those companies originate loans and place them with lenders.
Big banks and thrifts operating in OC, such as Bank of America Corp. and Washington Mutual Inc., haven’t announced layoffs. While these lenders also have suffered a decline in loan activity, they still get revenue from servicing loans made during the boom.
Those laid off at other mortgage companies and title insurers mostly are part-time and temporary workers from staffing agencies, sources said.
And while some mortgage companies are cutting jobs, others,such as those focusing on second mortgages,said they are hiring. Among them: Secured Funding Corp., which leased 60,000 square feet of office space in Costa Mesa this summer.
In fact, mortgage companies that don’t take deposits like banks employed about 17,800 people in OC in mid-September, which was up 7.2% from a year earlier, according to the state’s Employment Development Department.
But those numbers could reflect a surge of refinancing that came after rates started rising in the late summer and lag job cuts that have come in the past month.
Ann Marshall, labor market consultant with the Employment Development Department, said summer typically is a boom time for the mortgage industry. If more jobs are cut than added after the summer rush, the data won’t reflect that until the October survey is completed, she said.
As for title companies, the state lumps its job figures with lawyers under “legal services”,which were higher in September than a year ago but lower than in August.
Fidelity National added 6,000 workers in the past year to bring its total to about 19,000 people, according to Foley.
The company is back down to nearly 16,000 workers and will continue to cut jobs to approach last year’s level of about 13,000, Foley said.
Refinances accounted for up to 80% of Fidelity’s orders in June and early July, Foley said. The figure has dropped to 30% today, he said.
But the downturn hasn’t hit Fidelity’s wallet yet. Third-quarter earnings were up more than 90% from a year earlier to $277 million. Revenue in the quarter was up 70% to $2.2 billion.
A large backlog of orders kept revenue and earnings up, Foley said.
Many in the mortgage industry have worked through their backlogs and should start to see revenue slipping in the fourth quarter, sources said.
“Seasonally, (the fourth quarter) is a tough quarter anyway,” said Ditech.com’s McCarthy, who also is the general manager of GMAC’s new CalDirect Home Loans, also based in Costa Mesa. “November and December are some of the lighter months.”
Sales and earnings at Fidelity should come down next year, but not dramatically, Foley said. The company has other business lines that will offset the drop in title insurance orders, he said.
