The O.C. Mortgage Bust

Workers leave bankrupt American Home Mortgage Investment in New York, which, like other lenders, was hit when the housing market soured. (By David Karp -- Associated Press)

History also played a role. The city and county once had many savings and loans and locally owned banks that disappeared, leaving behind a pool of workers with strong financial services skills and a desire to stay put, Kyser said. Irvine, known for its superb school system and home to a branch of the University of California, has been ranked by the FBI as the safest large city for the past three years.

Those workers jumped at the opportunity to make money in a hot industry with a low barrier to entry. In most states, mortgage brokers need only pass a written test and pay a few hundred dollars for a license, according to Wholesale Access Mortgage Research & Consulting, which does research on the residential mortgage market.

In California, requirements vary according to the job. People who sell loans in-house for a residential lender do not need a license. But brokers must have one. That requires at least two years' full-time experience in real estate sales, taking eight college-level real estate courses and passing a five-hour written exam. Agents who work for these brokers must pass three courses and a three-hour test.

At PC Lending, a family-owned brokerage in Irvine, some of the most skilled agents previously sold cars or time shares. They had lots of drive but rarely a college education, said Brett Brofman, the company's vice president of administration and operations.

Of the 60 agents at her firm, only 15 are actively producing loans now, Brofman said. The rest have left the business or branched out into other jobs.

"One guy quit and is now interviewing for bellman positions at local hotels," Brofman said. "Another lady is selling tickets at a playhouse at night making $10 an hour" to supplement her much-reduced commission at PC Lending.

In a county where the median home price is $642,250, the mortgage salesperson's take-home commission is typically 2 to 4 percent. The county's August home sales were the slowest for any August since 1988, according to DataQuick Information Systems, and lenders are qualifying fewer people for loans. So commissions have dried up.

Brofman does not sell loans or make commission. She draws an annual salary handling her firm's marketing and administrative duties. She agreed to a pay cut in return for a two-day work week when business slowed. Brofman has since returned to work full-time without a pay raise to help keep the firm afloat.

Meanwhile, she's blown through $200,000 in personal savings and amassed $25,000 on her corporate credit card to support a branch office of PC Lending that she and her husband own. The branch, which used to have 16 agents, now has three.

"It used to be that you could come in a few hours a day, enjoy a four-day weekend and make plenty of money," Brofman said. "It's mean to say, but I used to joke that I could get my cat on the phone to sell a loan and a rate: 'Meow, meow, 5 percent.' Done."

Orange County's unemployment rate jumped to 4.2 percent in August from 3.6 a year before, led by losses in the financial services sector. But some economists predict the mortgage industry's job losses won't affect the broader economy in the long term. They say many workers attracted to the mortgage industry have skills that are easier to transfer to other industries than those of manual laborers such as autoworkers. And unlike autoworkers, this workforce is not familiar with the job-for-life concept.

"Many people who took these jobs already had more than one career and exhibited an ability to be flexible," said Diane Swonk, chief economist at the financial services firm Mesirow Financial. "They changed professions to cash in on the housing boom, and they will change professions again because of the housing bust."