Since the Mortgage Market turned sour, many people have said that Mortgage Brokers may become a thing of the past. Their reasoning is that most loans are going to fall in the conforming i.e. Freddie Mac and Fannie Mae category. Because most of the loans will be conforming why do we need Mortgage Brokers? Why not just go to a bank and get the same loan? Well, I have been getting emails from a guy by the name of Josh Fuller, from the Company Plan B. One came over yesterday that has a great outline of the problems facing Mortgage Brokers today.
The 8 Most Dangerous Trends Facing All Mortgage Brokers Today
· Zero down loans, stated income, FICO score below 600 are out
· Borrowers now need a down payment, verified income, bank reserves and a FICO above 700
· Subprime mortgages (ARM's, interest only loans, and other "creative financing" deals) made up about 25% of all mortgages, they total about $2.5 trillion and according to Moody's, about half of these loans are at risk of defaulting
· About 2 million subprime borrowers with adjustable-rate mortgages are at a risk of default or foreclosure
· The Federal Reserve estimates that subprime mortgage losses could reach $100 billion
· Former Fed Chairman Alan Greenspan, admitted "while I was aware of a lot of these practices were going on, I had no notion of how significant they have become until very late, I really didn't get it until very late in 2005 and 2006"
· Low buyer confidence has resulted in less buyers, thus less applications
· Experts estimate 156 major U.S. lenders have "imploded"
· Countless small and medium-sized mortgage lenders have gone bust due to rising defaults and delinquencies
· It is estimated that more than 50,000 mortgage industry workers have lost their jobs and the number continues to grow
· Rates may push rates up to 10 percent to curve inflation in the upcoming years
· If the US Federal Reserve were to keep the inflation rate between 1 and 2 percent in coming years, it could be required to force interest rates into double digits, (Fed chairman Alan Greenspan warns in his memoir)
· Global macro pressures will take over and devalue the dollar, eventually forcing rates back up again, with even more bad debt to pay off
· Experts say low interest rates in the early part of the decade have laid the foundation for current problems in the housing/credit markets, which will lead to higher rates
· Rising oil, the war, a weakening economy, the deterioration in housing, rising interest rates, big deficits, a weak dollar, and a volatile stock market; all have the potential to trigger a worldwide recession
· The world's investment banks are to reveal a $30 billion loss from bad debts
· Experts feel a continued real estate slump with a record bust is expected due to high leverage, credit tightening, and the massive amounts of ARM's that will be reset over the next year of two, which will cause higher monthly mortgage payments for many people who simply can't afford it
· Foreclosures will skyrocket, and they are already hitting record highs in the speculative markets, in California defaults are at a 10 year high
· Lenders began foreclosing on as many as 345,135 Americans' homes in the second quarter, according to the Mortgage Bankers Association.
· Fed Chairman Bernanke warns mortgage defaults are going to get worse and they pose a very serious risk to the economy
----8 Trends by Josh Fuller
Your mortgage partner for life,
Rey "Steak Dinner" Gallegos
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Las Vegas Home Loan Call me today at 702-808-8328 or visit my website www.4NevadaHomeLoans.com FHA Loans Las Vegas & VA Loans Las Vegas Conventional Loans, Purchase or Refinance Yo Hablo Espanol
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I look at it as 8 new opportunitys to earn business and show the client how professional we are
Although it makes you think, I cant help but realize that people will always need home loans. Brokers have been around for a long time. Its a great time to make changes in your business habits. Keep positive Rey!!!
Well my friend this sure wasn't the best read for starting my morning......but reality is what it is. After every storm the sun will shine, and this really is no different. It was time to get rid of the sharks out there that were taking advantage of people, and the consumer needs/needed to wake-up and realize that "if it sounds too good to be true it usually is."
There will always be a place for the Good Brokers, and Housing always goes through it's cycles........just grab your coat and hat....and we will all weather this storm :) :)
You have the trends to deal with and we have adapt what has happened and make it work for us as agents.
We have 2 choices. 1 give in and give up. or 2. Ride the storm and be a super hero in the end. Great statistics. I choose not to give up.
So what are the solutions? These kinds of articles and posts of doom and gloom bother me. I was always taught to not present a problem without at least 2 solutions.
Yes, this is happening but I'm getting calls, people are still moving, babyboomers will still be downsizing and people will still need homes.
There will always be people outside the "banks" radar and a need for mortgage consultants. I'm just starting in this business and to me it means a chance to get my foot in the door and be well trained. I'll have the lions share of the business when the next upturn comes!
Joe: Well Said!
Tom: You obviously have not read my blog! I am not the type that passes on negative information every day! I am one of the most positive Mortgage Brokers in Las Vegas.
Kathy: I didn't mean to ruin your morning!
Susan: I couldn't have said it better myself! That was the point of this post. UNDERSTANDING THE TRENDS! If you don't know what the trends are you can not adapt to them! Thank you. Every one else thinks that I am being negative!
Shaun: Well said! Good to see you around!
Kate: My phone is ringing now more than ever! Please don't use that term Doom and Gloom about my post! I don't post doom and gloom!
I will restate what the reply to Susan: Susan: I couldn't have said it better myself! That was the point of this post. UNDERSTANDING THE TRENDS! If you don't know what the trends are you can not adapt to them! Thank you. Every one else thinks that I am being negative!
You have to be a student of the game and know the situation you are in so you can capitalize!
Kate and everyone else! You don't have to be looked at as negative because you understand the problems facing your industry! The ostrich approach DOES NOT WORK! You have to understand what is going on with your career.
People should be planning now for what is coming. Too often and too much do people wait and then react. The market has been and is turning.
As stated numerous times above this is an opportunity to grow your business.
This turn is eliminating the people that were in it just to turn a quick buck.
The individuals that remain will be those that are committed to doing the small things that are necessary to get their customers' loans done.
Got the same email this AM. Also read this morning that nationwide, Sub Prime lending volume is down 65+% (go figure) while conforming is down only 6%. We've always pursued the conforming paper anyway, so not much of an impact here. As other Brokers fall by the wayside, even though the pie is smaller, there are less of us eating it. The challenge in business development today is to properly educate clients that they can in fact still borrow at very attractive rates. All the media hype is negatively impacting peoples perception of qualifying for a mortgage, be it a refi or a purchase.
Rey,
First of all the "Steak Dinner" part is making me hungry! LOL! It is right around lunch time.
I wanted to thank you for commenting on my Las Vegas Broker Blog. I appreciate your referrals and I will absolutely contact your recommendations. And, I agree with you that he will need an honest and ethical lender and for that reason, I am going to forward you his information. Tell him Rochelle sent you!
Thanks and hopefully we can continue to network together in the future!
Rey - staying current on market trends is just as important for real estate agents as it is for mortgage brokers. Those that don't will fall out (thank goodness) and those that do will adapt and survive. I was talking with a local agent several days after the Countrywide lay-off notices and she had no idea the reason I found that surprising is her husband is a mortgage broker. I guess neither of them are keeping up.
Hey steak diner - I am with you....
Last man standing baby!
For the first ten or so year in this business, most of the loans a originated a s a broker, or managed as an account exec were FNMA, FHLMC, and FHA. Brokers took over the business on these products.