Irvine, Calif: Welcome to subprime’s ghost town
Add a Comment 
irvine, subprime March 27th, 2008A year ago Irvine, Calif., was still riding high on the subprime boom; then almost overnight the industry and more than 4,000 good paying jobs vanished.
The former headquarters of New Century Financial in Irvine, Calif., pictured here on April 2, 2007, the day the company filed for bankruptcy.
IRVINE, Calif. (CNNMoney.com) — The subprime mortgage meltdown has shaken the entire U.S. economy. But nowhere might the impact be as stark as Irvine, California, a planned community nestled between Los Angeles and San Diego.
A year ago at this time, Irvine was home to 18 subprime lenders, including many of the leaders in the field, such as New Century Financial and Option One. Then, in what seemed like the blink of an eye, 4,100 good-paying white collar jobs were gone, or roughly 2% of the city’s work force.
And while that may not sound like a huge number of jobs lost, the ripple effects of the collapse of what was once a vibrant industry has extended far beyond the mortgage lending arena.
Irvine had become the center of the subprime industry almost by accident. As the business of writing mortgages to riskier borrowers grew rapidly in the middle of the decade, many top employees at the established subprime firms struck out on their own, setting up shop nearby.
There were other major subprime lenders who were also nearby to Irvine, including Ameriquest Mortgage in Orange. Even the lenders in the field that didn’t have their headquarters in or near Irvine had offices in the area to try to tap into the talent pool it had to offer.
But the industry imploded even faster than it grew. New Century, which had been the nation’s No. 2 subprime lender with $51.6 billion in those loans, filed for bankruptcy last April and essentially halted operations a month later. Option One, a unit of H&R Block (HRB, Fortune 500), closed down late last year once efforts to sell to Cerberus Capital Management fell through.
Read Full Article
