The consumer residential real estate mortgage industry is cyclical. How many times have you seen that in the paper? Since I have witnessed four (4) of these cycles during my career, I wanted to get into some detail about this today.

It's actually like a pendulum – swings one direction for a while; most folks do not accurately predict for how long, by the way. As I recall, this last swing direction started just after Black Friday in late1998 and pretty much began to fizzle out in the fourth quarter 2005. What we all saw, were mortgage interest rates sinking, and real property values going through a hype-inflation era. For all who entered our industry during that period, they experienced the blessing of a growing income stream, and borrowers falling off trees into their laps, life was sweet. This cycle hit an all time historical low in rates, and an all time high in appraisal values. Industry employment numbers expanded, and there were big production numbers and easy money for originators and funding sources.

Today we're at the beginning of the swinging pendulum going back the other direction, property values softening (sinking in many areas), and rates generally moving upward. No more soaring property values, and decreasing rates. Will we hit another record, like in the last cycle? Nobody knows that answer. Instead of the absolute highest home values ever, will be see the lowest ones? Instead of the lowest mortgage rates in history, are we facing the highest ones in decades? What I can absolutely assure you, is that I don't know. Will it follow this new track for as long as it did the other way? I doubt it, but I strongly believe it surely will continue this new direction for a long time, since that is the nature of the swinging pendulum and what ‘cyclical' means.

Countrywide's founder and CEO recently told equity analysts in a conference call, "I've never seen a soft landing in 53 years in the mortgage business. I think we have a way to go here for this thing to level out." He also expressed some concern about home prices that are flat or even falling in some places. And to that I say, 'even though he's been in the industry a dozen more years than I; Angelo seems to agree with my own viewpoint.

Survival is an essential thought which needs to be at the forefront of your mind these days. Here's a couple of suggestions for your consideration. Invest in your career by seeking out some serious industry training, education and information to supplement what you already understand – another viewpoint could be just what you'll need to make it through this cycle direction, especially since you don't know how long it will last or how deep it may become. You need to think in terms of ‘years' not ‘months' – the swing back this other way won' be short, just like it wasn't short when it was going the 'funner' way. Another idea is to close your shop if it's small or medium sized, and you take a job with one of the major financial institutions, where you'll receive a low salary and a small bonus/commission but a truck load of training. This way you won't starve, and you'll come out the other side stronger and ready to face you future.

With either suggested idea, you end up being better for yourself, your family, your customers, and a better industry citizen as well. CLICK HERE to tell us your views on our Discussion Board




















Experian: Mortgageholders Have Higher Scores
Consumers with mortgages have an average credit score 55 points higher than that of consumers without a mortgage, according to a study by Experian Consumer Direct, Irvine, Calif. The provider of online credit reports to consumers said the study also indicates that consumers with second mortgages have an average credit score 81 points higher than that of consumers without a mortgage. "Consumers with mortgages are doing a great job managing their credit, and those with second mortgages are doing even better," said Ty Taylor, president of Experian Consumer Direct. "Although consumers with mortgages have on average about five times more debt than those without, their average credit score is 713 -- compared to 658 for consumers without a mortgage." CLICK HERE and give us your two cents on our Discussion Board





USPAP Goes Wild!
Currently under consideration, is the notion of adding additional photos of better neighbor coverage from 'Google Earth' imagery, to the residential real property appraisal report.

This concept was discussed with some enthusiasm at their recent annual convention. This modification to The Uniform Standards of Professional Appraisal Practice (USPAP) which their members adhere to, utilizing even more technology; would improve the real property appraisals. Representatives from the mortgage lending community find this innovative idea potentially quite helpful. CLICK HERE and Tell us what You Think on our Discussion Board



















Tight Underwriting Best Foreclosure Cure
Tighter underwriting standards on subprime loans could have a greater impact on reducing foreclosures than banning prepayment penalties and balloon loans and other so-called predatory lending practices, according to a study by the Office of the Comptroller of the Currency. OCC researchers discovered a strong correlation between high foreclosures and refinanced loans with no- and low-document features, which they equated with "loose" lending practices. The study of foreclosures in Chicago did not find the same correlation on subprime loans with balloons or prepayment penalties (36 months or longer) or on no- or low-doc purchase loans. The OCC researchers maintain that underwriting practices that ensure borrowers can repay their loan represent a more effective approach to preventing foreclosures than "blanket" prohibitions on certain lending practices. This approach is also consistent with the proposed guidance on interest-only and payment-option mortgages, according to the study. Federal banking regulators are expected to finalize the guidance this fall.

Something we have been screaming about for quite sometime, happy 'they' finally get it. CLICK HERE and give us your two cents on our Discussion Board

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Our E-Mail Answers Program might be just what you need. If you can't call our Hotline, and you don't need all the horsepower of one of our Mentors right now, but still need some help off and on - then this program is for you. Click Here and check it out; all our answers are warranted to be right! Prepay a half dozen and get one free!

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Federal Reserve officials were still waiting to see "reliable" data on house prices when they voted to pause and keep the target federal funds rate unchanged at a Federal Open Market Committee meeting in early August. "Reliable, comprehensive data were not yet available on recent house price movements, but the rate of appreciation appeared to be moderating and was likely to slow further in coming months," according to the minutes of the Aug. 8 FOMC meeting. In late July, the National Association of Realtors reported that the sale prices of existing single-family homes increased by only a 1.1% annual rate in June -- down dramatically from a 14.5% annual rate in June 2005. The FOMC minutes show that Fed Chairman Ben Bernanke and other FOMC members recognized that residential investment "contracted" in the second quarter and the housing market "continued to cool." However, they said it is still uncertain how much the slowdown in housing would "restrain" consumer spending. The Office of Federal Housing Enterprise Oversight is scheduled to release its Housing Price Index for the second quarter on Sept. 5. Anybody want to bet what's going to happen during the next four (4) months? CLICK IT to discuss this item on our Board














More ... in the News
C&D Lending Still Brisk at Banks.Construction and development lending at banks and thrifts has grown at a 30% annual rate over the past eight quarters, but delinquency rates are starting to tick up despite the rapid growth in their construction portfolios. The Federal Deposit Insurance Corp. reported that construction lending increased by $31.7 billion in the second quarter at a 32% annual rate. FDIC-insured institutions held $513.9 billion in C&D loans as of June 30, up from $389.1 billion in the second quarter of 2005 and $299.4 billion in the second quarter of 2004. The FDIC report also shows that noncurrent C&D loans have increased from 0.38% to 0.43% over the past two quarters. Banks and thrifts currently hold $2.2 billion in construction loans that are 90 days past due. Approximately $1.8 billion of those loans are classified as nonaccrual. "It is something to keep an eye on," said FDIC economist Ross Waldrop. But it is "nothing dramatic," he added. CLICK IT and tell us what this means to you










HIGHLIGHT: "Certified Mortgage Professional"
We're excited to announce we will be launching our all new Certified Mortgage Professional program later on this month! It will consist of a broad far reaching lesson on many facets of our industry, a timed/graded complex examination and a CMP designation for all who complete the program and pass the exam.

It will provide a foundation of understanding on a range of issues, transforming the candidate into a Certified Mortgage Professional. We feel today's well informed customers search for a true industry professional to help them in financing (or refinancing) one of the largest investments in their lifetime. Do to this, they will be more inclined to select a CMP who has taken these additional steps to increase his or her mortgage industry knowledge to better serve customers. For more on our CMP program CLICK HERE and check it out.