Mortgage industry workforce plunges by more than 50% in five years

Here are some hard numbers for the downturn in mortgage employment I wrote about last week — and they show a reduction of more than 50% in home-lending jobs since the peak of the housing and commercial real estate bubble.

The news peg for the story was mortgage goliath Wells Fargo & Co. saying it had eliminated 1,900 home-lending jobs, mostly workers hired temporarily to deal with last year's mini-boom in refinancings.

But that's nothing compared with the industry's overall decline from more than 500,000 employees in late 2005 and early 2006 to 248,000 in February, according to Bureau of Labor Statistics data compiled by the Mortgage Bankers Assn.

The latest numbers are the lowest for the industry since August 1997, according to the mortgage bankers group. The data, which arrived too late to be included in last week's story, showed that employment peaked at 505,000 in February 2006.

The numbers probably overstate mortgage employment slightly, because the trade group combined the BLS categories "real estate credit" and "mortgage and nonmortgage loan brokers." But the lion's share of the jobs are related to mortgages and the downturn is dramatic.

Following up on the story, Calculated Risk posted an interesting chart showing the correlation between 30-year fixed mortgage rates and refinancings. One notable detail is how round numbers catch the attention of homeowners. Check out the giant spike in refis when the rate dipped below 6% in 2003 and the also pronounced but smaller spike when it fell below 5% in 2009.

Mortgage employment also may have been affected by new licensing requirements for employees of nonbank lenders, adopted as part of regulations cleaning up the mess from the financial crisis. The licensing has made it more expensive for these independent brokers and mortgage bankers to maintain their payrolls, people in the industry say. 

Chicago Bancorp, a large mortgage-banking firm, completed its purchase of Generations Bank, a Kansas City, Kan., savings and loan, last week to gain access to a nationwide lending market without the added licensing costs, Chicago Bancorp founder Stephen Calk told the Kansas City Star.

— E. Scott Reckard

Photo: Inland Empire homes. Credit: Irfan Khan / Los Angeles Times