What We're Hearing

Last week the government released its latest unemployment figures, showing not only a significant (and unexpected) rise in the national rate but a loss of about 2,000 mortgage jobs. You would figure that with refinancings humming along, home sales improving (thanks to the federal tax credit and ultra low rates), and a government emphasis on loan modifications that hiring in different facets of the mortgage industry would be strong. (The job losses were not all lopsided toward the broker segment, though that's a partial explanation.) But I do have a theory about why the mortgage employment figure wasn't better. Some mortgage banking professionals -- either by desire or they were forced to -- are now working for hedge funds, outside vendors, and in real estate, facilitating the sale of foreclosed homes and notes. This shift in jobs is a subtraction from mortgage employment but shows up in other categories like real estate and financial services. Richard Tachine, a mortgage banker in California, recently wrote to me, noting that the toxic mortgage asset market in that state "is one of the fastest growing, job creating businesses around, but it's not for the weak. Well capitalized firms are purchasing giant pools of performing and nonperforming loans." Meanwhile, I continue to hear anecdotal stories that some cash-rich hedge funds are grubstaking nonbank mortgage startups or acting (to some degree) as warehouse financiers...