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| A flawed organizational model at a Lehman Brothers subprime unit will result in a restructuring, merger and 400 layoffs.
The investment banker announced it will combine subsidiaries BNC Mortgage LLC and Aurora Loan Services LLC into a “unified residential business.” Layoffs amounting to 400 will primarily result through the reorganization of BNC’s current branch structure, Lehman spokesman Randy Whitestone told MortgageDaily.com. The business will be “upgraded” to five regional operating centers “The cuts are not due to the merger, it’s because of the way BNC is organized,” Whitestone said. BNC originates loans from over 36,000 independent mortgage brokers through its 50 branch offices nationwide and is ranked the seventh-largest subprime wholesale lender, according to its Web site. It currently employs more than 1,600, of which over 500 are housed at its Irvine, Calif., headquarters. It is unclear when the layoffs will be completed or exactly where they will occur, as the spokesman declined to provide further details. But he did say that the “merger will take place over the next 12 to 18 months.” In a conference call Tuesday, Lehman said it had “flat” subprime volumes through the first quarter. “Overall, there has been a reduction in subprime originations,” a Lehman executive said. The subprime market had a “negative impact on the overall economics of the business.” Aurora funds Alt-A and nonconforming mortgages on a correspondent and wholesale basis and is also a master servicer of residential mortgage-backed securities, according to its Web site. |
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