A.J. Simon didn’t always want to be in real estate.

In fact, the Michigan State communications major wasn’t quite sure what he wanted to do when he graduated from college. But he knew a good gig when he saw one: A friend was making big money working in the booming subprime mortgage business.

He’s also experienced firsthand what happens when an industry goes bust.

The 32-year-old Detroit native was laid off virtually without notice on Valentine’s Day from his job as a mortgage broker at the Agoura Hills office of Silver State Mortgage, a Nevada-based lender that suddenly shut down its Alt A lending unit.

“We had gotten some wind of it the previous day,” he said. “Word was that the interest on the company’s loan was due and that if we couldn’t find a capital partner in time we could be closing up. We came in the next day and it was a done deal. They didn’t pay anybody; it was like, ‘Sorry, guys’.”

Since then Simon has landed on his feet, taking a position with the Alt A lending unit of Bear Stearns & Co. Inc., a big investment bank that has far more capital resources than Silver State.

That leaves him in a much better position than many of other thousands of employees who have lost their jobs in the past month or so as big lenders such as Countrywide, Fremont and others have closed lending offices at a rapid pace.

And considering the kind of money that Simon and others were making he’ll acknowledge hundreds of thousands of dollars, with top colleagues making close to $1 million that’s a big comedown for those workers suddenly jobless.

Some of Simon’s former coworkers ended up at IndyMac Bank, others at No Red Tape Mortgage and a few landed, like Simon, at Bear Stearns. Others haven’t landed anywhere. “Things really tightened up out there,” he said.

Easy money

Simon came to Los Angeles in 1996 not exactly sure what he wanted to do. Like many recent college graduates, he hopped from one entry level job to the next. He worked in the telecom industry for a while and even in marketing for the Clippers.

Then in 2002 he got a job at 1st Franklin Financial Corp., a Toccao, Ga.-based consumer lending company specializing in direct cash and real estate loans. At 1st Franklin, Simon said business was great for the four years he was there, as it was during the height of the housing boom.

“The market was so hot. I was selling 100 percent financing on loans when I was at 1st Franklin we all were and I thought, ‘Wow, this is pretty aggressive stuff,'” Simon said. “The flip side of some of the loans being written is that if you’re not careful, people can’t afford their loans. There’s payment shock when the adjustable rates go through the roof.”

With the housing market showing signs of a slowdown last year, Simon and some colleagues left 1st Franklin’s subprime unit to go over to Silver State. The Nevada company was growing and Simon got a job in what he thought was the safer Alt A side of the business loans made to borrowers who don’t qualify for prime rates but who have better credit than subprime clients. As it turned out, it didn’t matter, because Silver State couldn’t find the capital it needed to keep going.

Simon has his ideas on why the fortunes of companies such as Silver State have gone south so quickly: a lack of oversight and a white hot market that created an environment in which brokers processed loans as fast as they could to take best advantage of it.

Simon fully expected an eventual regulatory backlash. If that’s what it takes to keep the subprime and Alt A lending industry on an even keel, so be it.

“Bear Stearns is an immensely reputable company, they’re not going anywhere,” Simon said.