Lehman Brothers is closing its sub-prime mortgage subsidiary BNC Mortgage, losing 1,200 jobs across 23 US locations.
In a statement the company says: “Market conditions have necessitated a substantial reduction in its resources and capacity in the sub-prime space.”
Lehman will continue to originate mortgages by its Aurora Loan Services platform that focuses on Alt-A mortgages which are closer to meeting prime mortgage standards.
According to reports, the firm will record $25m in after-tax charges and a 100 per cent after-tax goodwill write-down of approximately $27m.
This announcement comes just after another lender, Accredited Home Lenders, said it would be cutting 1,600 jobs.