This is an interesting time that we live in. There is so much uncertainty in the stability of peoples lives across our great nation. What people thought that they had built up in equity is fast disappearing, Jobs are becoming more scarce, and it takes a little more credit to get to where you want to be than it used to. Something that I believe is underestimated however is the fact that our economy is cyclic.
Our economy is designed to give and take. It is designed so that when something is off kilter it makes adjustments automatically and corrects itself. Some of those corrections are not always easy to deal with. Sometimes when we are in this type of a market due to instability in our economy we as individual American's really "feel the pinch".
Home loan applications are down significantly. The phones are ringing less and there is less actively overall in the office. I am sure that many other lenders are feeling the same strain.
The truth is that operating in the capacity of a mortgage advisor is still a viable and fruitful career. When you think in terms of pie charts; yes it is true that production as a whole is down. It is also true that if one pie is half the size of another pie but there are 1/4 the amount of people eating that pie there is still more pie to go around.
Yes production is down for the industry, but many many originators have moved on to "greener" pastures. That leaves a whole lot of pie for those of us who are still here. The industry has shrunk when compared to the historical bubble that we have all just witnessed burst. But the industry is no less viable now than it was back in the late 80's. Rates used to be in the teens and no-one batted an eye.
In the last few years rates have been historically low and we have all been spoiled. Now rates are still historically low, just not as low as they once were. Now people are so afraid of rising rates but the fact is there is a whole lot of wiggle room before anyone really has to worry.
Everyone has seen the press circling around all of the huge sub-prime lenders that have gone out of business. Its true that many lenders have had liquidity crisis. The reason is simply that those lenders were not properly evaluating risk factors. People were easily able to get into "too much home". Now that this bubble has burst we all need to look at tightening up our own personal lending criteria as well.
It is much harder to get into a jumbo loan without personal assets and a down payment, using a "power option arm" (I hate these products for FTHB's) to get into a home that is too expensive is more difficult to get approved. The fact that certain loans are harder to get for certain borrowers is not a bad thing. Abusing the system in place and finding loop holes to put your borrowers through that is not truly in their best interest is a bad thing.
It is not enough to have had a borrower "tell you what they want". If our clients already knew what they wanted and how to do it we would be out of a job. Often times what the borrower wants is not in their best interest. Just because a borrower wants something that they should not get does not mean that they are "stupid". It simply means that we are the professionals highly trained in our field of work just like most of our clients are. We are highly trained to determine first whether or not we can qualify our clients for what they are looking for and then help them determine whether or not it is viable given their current situation. If our client is not qualified it is our job to point them in the right direction. If my client is just barely qualified based on the guidelines, but I can tell that it will put my client into a bad situation it is my duty to properly inform and educate my client as to what their best options are.
As far as a liquidity crisis goes; Fannie and Freddie have no liquidity issues at all and neither does FHA. There are plenty of loans still out there to be originated. Thanks for reading! Have a great day!
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