The dramatic collapse of the nation’s mortgage markets has hit home in South Florida, with almost 800 people losing their jobs in recent months as lenders slash operations.

Statewide, the financial services industry has eliminated more than 2,800 positions since the beginning of the year, according to Challenger, Gray & Christmas, a Chicago-based outplacement consulting firm.

That’s a sharp retreat from the boom years between 2000 and 2005, when mortgage companies grew quickly as they sold adjustable-rate and interest-only mortgages to consumers trying to get into homes some ultimately couldn’t afford.
With declining property values and rising interest rates now leading to mortgage defaults and foreclosures, demand for those loans has dried up and lenders are trimming payrolls or shutting down.

There is an old saying that “a little knowledge is a dangerous thing.” It sure rang true as I read the Sentinel article on Aug. 26, “Orlando Condo Boom a Thing of the Past.”

The story suggests that condo projects nearing completion are the “worst-case scenario.” If the Sentinel had put some statistics in context and dug a little deeper, the paper would have found plenty of good news about the downtown-condo market, news that suggests projects under construction are still very strong investments.

In the fallout from the subprime mortgage crisis, even well-heeled consumers are finding it tougher and more expensive to get jumbo mortgages of more than $417,000. That’s because investor interest in these larger loans, which aren’t backed by Fannie Mae and Freddie Mac, has dried up amid the turmoil in mortgage markets. In turn, the jumbo loan crunch could potentially dampen pricey real estate markets like the Bay Area, where two-thirds of mortgages are jumbo.