Monday, August 27, 2007

The Global Credit Crunch Scrambles the Picture

by Tanta on 8/27/2007 07:50:00 AM

From the Washington Post, we learn that the credit crunch is impacting local construction and lending employment, as builders struggle to sell homes to extremely unqualified buyers, in the absence of merely unqualified buyers, and lenders hire the "top dogs" from cratering subprime and Alt-A outfits who no longer have money to lend, because there's a lot of money to lend.

Kilby, a member of the fourth generation in his family to work in the building industry, has cut prices on his homes in subdivisions of Prince George's and Charles counties. The new homes are built with luxury finishes like granite countertops, crown molding and large spa tubs -- the kinds of bells and whistles people were demanding when credit was easy to come by and his sales offices were full of prospective buyers. Now that it's become harder for home buyers to obtain loans, he's stuck with expensive houses on expensive lots that he is struggling to sell.

"We're doing just about anything we can do to get people into a house, said Kilby, a 50-year veteran of the home-building business. "And these are people we would have told to take a hike last year or the year before last."

Slower sales and lower prices have translated into smaller budgets for salaries. From a staff of 17, Kilby has cut a carpenter, a project superintendent, a building laborer and a punch-out clerk.

While construction jobs have been the most visibly affected, workers in related industries are dusting off their resumes as the global credit crunch scrambles the employment picture.

Capital One said it would close its mortgage banking unit, GreenPoint, which has 31 locations in 19 states, including one in Silver Spring that employs about 28 people and another in Baltimore with 29 workers.

Those losses have created opportunities for others.

Bank of America's mortgage lending office in Annandale is trying to hire more lending agents, targeting seasoned veterans laid off from troubled competitors.

"There's still a lot of money out there to lend and people who want those loans so my phone has been ringing off the hook since the other shops closed down," said Rick Eul, assistant vice president of the Annandale office. "We're picking the top dogs out of those offices."