Gaithersburg loan unit lays off 160 workers


October 16, 2007|By Laura Smitherman | Laura Smitherman,SUN REPORTER

Aurora Loan Services LLC, the mortgage-lending subsidiary of Lehman Brothers Holdings Inc., has laid off 160 employees in Gaithersburg as the parent company moves to scale back its home-loan business in response to turmoil in the industry and in the secondary market where investors trade mortgage debt.

The layoffs were disclosed in a notice filed with the state Labor, Licensing and Regulation Department. Aurora originates both prime and subprime mortgages. A Lehman spokesman said yesterday that the company closed a regional operating center in Gaithersburg last month.

The mortgage industry has been wracked by higher defaults on subprime loans in recent months, and the effects have rippled out to investors as well as to the real estate market and construction sector. Dozens of lenders have gone bankrupt in recent months.

More than a third of job cuts announced in September came from mortgage lenders, construction companies and real estate firms, according to Challenger, Gray & Christmas, an employment research firm.

So far this year, housing-related job cuts have accounted for nearly 98,000 of the total, or 1 in 6, with financial firms being the hardest hit.

Lehman Brothers, the nation's fourth-largest investment bank, said last month that it planned to restructure its mortgage business, and to lay off about 850 people globally. Under the reorganization, Aurora will continue to operate under the name Lehman Mortgage Capital along with subsidiaries in Japan and Europe.

In a separate announcement in August, Lehman said it would shutter its subprime subsidiary BNC Mortgage LLC, laying off 1,200 employees in 23 locations across the United States. None of those cuts affect Maryland.

Aurora Loan provided notification of the layoffs in Maryland under the federal Worker Adjustment and Retraining Notification Act. Companies are required under federal law to provide workers with 60 days' notice of plant closings and mass layoffs, and to notify state and local governments.

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