Lehman Shutters BNC Mortgage Unit, Cuts 1,200 jobs
From Staff Reports
Lehman Brothers Holdings Inc. (NYSE: LEH) yesterday (Wednesday) announced that it is shutting down its subprime-mortgage unit, BNC Mortgage LLC, becoming the latest company to stop offering home loans to borrowers with risky credit ratings.
The move will result in 1,200 employees being fired. BNC was a top-20 subprime mortgage lender in 2006, originating more than $14 billion worth of home loans, according to Inside B&C Lending, an industry journal.
Lehman said it still would be offering mortgages through Aurora Loan Services LLC, another unit that focuses on so-called Alt-A home loans. Alt-A mortgages are offered to more-creditworthy borrowers, but they often require less documentation. Some lenders have fallen into problems over those loans, too.
The closure of BNC will affect roughly 1,200 employees in 23 locations across the country, and will cost the firm more than $50 million.
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