Long Island Financial Sector Feels Mortgage Misery

December 22, 2007

(Long Island, N.Y.) If it weren’t for the housing market Long Island’s economy would be progressing nicely. Occupancy rates, employment, and job growth were all stable for the second half of the year however since the housing market is in a never ending slump all the other industries are being pulled down with it.

Foreclosures have spiked, new home construction has decreased, and sales and home prices are dropping. Many employees have been laid off since August. Not to mention Delta Financial Corp., and American Home Mortgage, both local mortgage lenders located in Woodbury, have filed for bankruptcy.

The initial problem in the mortgage industry seemed isolated to subprime mortgages. However, the problem quickly became epidemic and began to affect the entire financial services sector. Lenders who catered to subprime clients as well as institutions that bought these mortgages were affected and many had no way out of the ordeal besides bankruptcy.

According to the Long Island Association’s chief economist, Pearl Kamer, approximately 2,300 jobs in the financial services sector have been lost between the year of October 2006 to the same month in 2007.

And, the problem is not isolated in Long Island. More than 10,000 workers were laid off in the state of New York in the month of August. This number only includes those job cuts that were announced publicly, so the actual numbers of job cuts are much higher.

The number of job cuts for the year in the financial industry is significantly higher than last year. In 2007, more than 147,395 jobs have been lost in the financial sector through the month of November. That is almost three times as many as in 2006.

But, it does not appear that these job losses are the last ones but rather just the beginning. Many experts believe the mortgage crisis has just begun and things will continue to get worse.

In the coming year fewer mortgages will be taken out, which means more job cuts. In fact, an estimate by the firm Friedman, Billings, Ramsey, & Co. points to another 130,000 job cuts in the coming year to even out the industry.

What will happen in Long Island remains to be seen. But, it is more than likely that as the financial sectors market continues to tailspin more and more qualified individuals will lose their jobs. That will result in a huge supply of qualified financial experts and very few jobs.

Posted by News LI Editor · Edited by Brianna - Filed Under Money