Fascinating Bloomberg story on the impact of the subprime mortgage market meltdown on Irvine, California. Not far north of La Jolla, Irvine was, until recently, the closest thing out there to the Silicon Valley of subprime. It was where many of the best-known, highest-flying companies were located, and where the mortgage speciation and innovation happened fastest.
No longer, however. With subprime mortgage company stalwarts New Century (NEW) and Ameriquest having laid off more than 3,000 people in Irvine, and with house and condo prices there down 17% since June, Irvine would like to stop being subprime central.
Half of the 20 biggest U.S. subprime lenders are in California, including three in Irvine, and about 13 percent of the nation's subprime loans are in the state, according to the Washington-based Mortgage Bankers Association and industry newsletter Inside Mortgage Finance of Bethesda, Maryland.
More than two dozen mortgage lenders have closed or sought buyers since the beginning of the year. Irvine-based People's Choice Home Loan Inc. filed for bankruptcy protection last week. H&R Block Inc. (NYSE:HRB) is trying to sell its Irvine-based Option One Mortgage Corp. unit. Accredited Home Lenders Holding Co. (LEND), based in San Diego, has offices in Irvine, and Ameriquest is based in Orange, just north of Irvine.