There comes a time in many lives where all the past actions or lack of action will add up to produce consequences that lead to failure. The future will be changed forever and these lives will be able to look back and pinpoint where it all went wrong. We are reaching that time quickly in the world of mortgage loan origination. Loan officers have been rescued repeatedly in the last ten years by one refinance boom after another and each time made the mistake of relying on low rates and easy money to keep their pipelines full and create a false sense of security. Well the perfect storm is brewing and the aftermath will not be pretty. Many factors will contribute to this storm and to date we have begun to see the first signs of bad weather. Why should you be concerned about your future in mortgage origination?
First, it is no secret that the easy money is gone forever. No income verification loans, subprime loans for bad credit, and hybrid ARMs for easy qualifying have all but disappeared. We are back to 1970s underwriting which means far fewer people can qualify.
Second, the last refinance boom was artificial in nature. The US Treasury bought mortgage banked securities in mass and artificially lowered interest rates to levels not seen since the 1940s. Millions took themselves out of the market for a very long time.
Third, this recession is different. When you add in the record high unemployment with a drastically sinking US Dollar it spells impending disaster for any hope of “free money.” The US Government is attempting to use tax credits to support the housing market which is a temporary fix, but certainly not long term.
Fourth, the US Governments record spending is setting up the main ingredient for the perfect storm, inflation. In inflationary times mortgage rates always rise. Right now inflation is being held in check by low consumer spending, cheap imports from China, high unemployment and low housing values. Our government has put us in a huge deficit that will ultimately create chaos in the financial system. Does this mean rates will skyrocket? No, but they will move out of any refinance range and we will be in a true purchase market.
Finally, fear still dominates the consumer, Realtors and us! Fear can create inactivity and this will be the downfall of many loan officers as they wait out the market. Unfortunately there is no bailout this time. The loan officers who will survive and thrive are those with a plan that diversifies their business and actively seeks purchase business. Most of our loan officer coaching clients are doing well, some even having a record year! How? They are actively seeking business by calling on Realtors, CPAs, corporations, military bases, financial planners, divorce attorneys, associations, hospitals and many more targets that would in past markets seem unconventional. New ways to do the business through Internet programs and online social media have sparked new clients at a fast rate.
Where are you in your business model? If you want to get back to high production and a lasting career, now is the time to take action. Start following my blog at coachkentaylor/blog for the next few months. Every few days I will have new ideas that can get you to the next level at no cost to you. You will have many of the ideas our coaching clients have found very valuable but you have to take action! Get started today and you can secure your future. Do the same old things and you will be caught in the “perfect storm.”