More Mortgage Lenders Announce Cuts and Closures

On Wednesday, three more prominent mortgage lenders announced they would be closing down some home loan operations and laying off thousands of workers.

Investment bank Lehman Brothers (NYSE: LEH) said that they would be closing their subprime mortgage unit, BNC Mortgage Corp., and let go about 1,200 employees.  Lehman is among the largest underwriters and traders of mortgage debt on Wall Street, and they were one of the first investment banks to make loans to subprime borrowers with the express intention of packaging the mortgages into bonds, according to Reuters.

Accredited Home Lenders Holdings (NASDAQ: LEND) issued a press release Wednesday saying it will cut more than half of its mortgage operations and lay off some 1,600 people or 61.5 percent of its workforce across 70 locations. Accredited said that it will not be accepting any new loan applications until it sees “improvement in market conditions.”

Also on Wednesday, HSBC (NYSE: HBC), the largest bank in Europe, said it will close a mortgage servicing center in Indiana and eliminate 600 mortgage-related jobs. HSBC’s provision for loan losses has soared more than 60 percent this year, mainly due to subprime loans issued in the U.S. The company said it will refocus on emerging markets due to credit conditions in the U.S.

The cuts announced Wednesday are the latest in a string of layoffs made public by banks and financial institutions looking to minimize exposure to subprime loans.