With the decreasing number of home sales and the ongoing subprime mortgage foreclosure crisis, some corporations in the mortgage industry have enacted major layoffs of their employees in recent weeks and months. Bankruptcies and layoffs in related industry sectors have also occurred because of this situation.

Multiple layoffs have been announced by this industry just in the past week (as of 09/13/07); the Sydney Morning Herald reported on the 10th that the mortgage lender Countrywide Financial would eliminate twelve-thousand jobs in the coming months. The Reuters news agency reported that Lehman Brothers Holdings and National City Corp plan to carry out layoffs of over twenty-one hundred employees, and the Kansas City Star published a news story indicating that H&R Block announced its intention to cut nearly six-hundred additional jobs at its subsidiary, Option One Mortgage Corporation.

Many mortgage industry layoffs occurred in August as well. Reuters reported on August 17th that NovaStar Financial, which issues subprime mortgage loans, cut its work force by thirty-seven percent (approximately 500 workers), and indicated that 35,752 jobs were cut in the financial sector during August (more than had been lost in a single month for at least fourteen years). The Arizona Republic newspaper published a news report in late August stating that 1st National Bank Holding Company (based in Arizona) had announced layoffs of 541 employees. Other sources reported layoffs at additional companies in the mortgage industry, including GreenPoint Mortgage, IndyMac Bancorp, and Accredited Home Lenders.

Fewer new mortgages are being initiated for various reasons, contributing to these layoffs; home sales are decreasing, lenders are applying greater scrutiny to mortgage applicants, and the availability of subprime rate loans is being cut back. Fewer employees are now needed to process the new mortgages. Some mortgage industry companies have even filed for bankruptcy. According to the Baltimore Sun newspaper, about sixteen lenders have gone bankrupt from December, 2006 through September, 2007. The economic situation has also brought about layoffs in the construction industry and other real estate related sectors.

Mortgage industry layoffs are likely to continue as long as the housing market remains weak. It remains to be seen whether or not it will be possible for the quantity of mortgages to increase again, despite stricter credit history requirements being applied to potential borrowers. With the many foreclosures occurring due to questionable subprime rate loans, the amount of mortgages being issued (and thus the number of people employed) by this industry may have been unrealistic and unsustainable.