1992 was my first real year in the mortgage industry. I was a loan originator for a tiny brokerage here in Denver. I specialized in FHA streamline refinances. These were good times as the market was still recovering from the S&L debacle, and the opportunity to fix all of those bad (mainly high interest) loans was wide open.
At the time, I was delivering much of my business to Director’s Mortgage, American Residential, and North American. In Denver, North American was a monster. We also did business with Empire of America, J.I. Kislak, and Shearson Lehman. In one way or another, all of these companies left wholesale, long before our recent “implosion”.
This week, I’ve been teaching, and siting in on some of the very first loan originator licensing classes for Colorado. The news of WaMu’s exit from wholesale lead some to question the future of the wholesale mortgage industry. For me, I guess it’s just a matter of looking to the past to help determine the future. Lenders come and go.
A forest fire is a terrible sight while it’s happening. The immediate aftermath is not so pretty either. But eventually an aspen tree takes root, and before you know it, the forest is healthy again.
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{ 9 comments… read them below or add one }
Driving brokers out of the market could be looked at as retailers trying to reduce their risk. It could also be considered an end run at reducing competition in the guise of responsible lending. Fewer players in the market is not a healthy trend from the consumer’s point of view.
It’s a natural cycle. The number of players will expand and contract. Don’t sweat it. Todd is right. Like love, the real estate related business is as perennial as the grass.
Todd what a great thougth and it is very true. it never looks good during the fire but it will rebuild. the mortgage industry has been around for a very long time and has seen its share of lenders, brokers and banks. some are still around but many have fallen away but the season still comes and the seasons still go and there are still lenders, brokers and banks wanting to do loans.
Todd — I’ve seen this ‘movie’ a few times, and you’re talking like you may have too. The ending is as you say. The tide rolls in, the tide rolls out, the tide rolls in…
The seaons of the year pass and so will the seasons of the mortgage industry.
Great post. thanks
I like your optimism, and you’re right. Things will get better. We needed a forest fire in the mortgage industry. Things had gotten out of control, and there were a lot of people who needed to be purged.
I was an originator back in the late 1970s, and left the business after Zions Bank refused to cover its committments when the interest rates took another leg up, but I have never seen a more dangerous lending market than this one. Not since the 1930s, have the commercial and investment banks suffered these kinds of liquidity/solvency problems. If the banks don’t trust eachother enough to lend to eachother, they will not lend to your clients on properties with declining values. They don’t have the money, and your average clients don’t have any real equity. If you’re waiting for this market to turn around, as if this were just another cycle, you better max out your HELOC before it’s taken away from you.
Excellent Post.
The mortgage market is no different than any other. There will be ups and downs. Eventually the housing market will return and all the banks will be wanting to blindly jump back into the pool.
After 15 years in the biz, it’s actually got me worried that the banks see an opening to drive mtg brokers off the cliff. Besides some lenders just plain shutting down their wholesale side, others, (like Wells Fargo to name one), give brokers higher rates…and I mean HIGHER. - This happened to me recently, where I was offered to quote a large purchase, $1.75MM sales price, and Wells retail offered the guy a rate that was 2% lower than I could offer as a broker. 2%! - How many times does a referral source call me when I deliver quotes like that? - Nah, I believe that lenders, banks, see the chance to drive brokers out of the business and ramp up their market share, then they can raise their profit margins wherever they want ‘em.
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