A Glass Half-full: An optimistic view of the US “mortgage implosion”

The recent "mortgage implosion" has shaken the confidence of a lot of players, big or small, in the mortgage industry. With the number of lenders closing down their operations increasing by the day, and reports of growing percentage of foreclosures across the United States, it is no surprise that a dark cloud of uncertainty looms over the head of any mortgage professional.

Though these may be trying times for the industry, all is not lost. It is just a matter of finding the silver lining in these clouds of uncertainty. For instance, in a blog by Todd Carpenter in Lenderama (the official mortgage industry blog),

"Most homeowners in today's market have had a 7% or maybe even an 8%+ loan in their past, and I'm not talking twenty years ago either. You are likely more freaked out about this then they are.

If May foreclosures DOUBLED in your state, that likely means they went from something like .2% of all loans, to .4%. It's bad, but jeez, a little perspective is in order.

Most homeowners have good credit. If half your loans are for clients with sub 600 credit scores, then half your clients are in the bottom 15% of all borrowers. Think about that.

Stated Income loans are not the most popular type of loan originated. Neither are Option ARMs, or sub prime loans, or 100% financing."

To add, it is a fact that most people in the United States would need to refinance or purchase a home regardless of the market conditions.

If you take a minute to reflect on these points, you'll see that the key in surviving the “crisis” is by developing and adopting strategies that will fit the times.

Just to pick up from the points cited above, if one would accept that interest rates at 7-8+% are "normal" (as they really are, the lower ones may be the ones considered as “unusual”), concentrate on the 85% of the US population that have above 600 credit score, market traditional loans programs such as the conforming loans and fixed rates and submit loans with full documentation (w/c will not only get your borrower a better rate, but will ensure that they get a loan that fits their financial capacity). On top of that, with the Mortgage Bankers Association estimating the 2007 Mortgage originations at $2.4 Trillion dollars as of their August 24 2007 report, things do not look that "doom and gloom" as all the hype suggest. Gone are the days when loan programs are handed out on silver platters. The current situation calls for more work on the part of the mortgage professional. It is, however, definitely worth the extra effort if it will lead to putting the mortgage industry back on the right track.

An increasing number of mortgage professionals have also taken a bold step by outsourcing part of or their entire mortgage loan processing . Some did so even before the implosion, and the current situation gives more reasons to do so. This approach may also be employed by other industry professionals.

- As a loan originator whose business is centralized around marketing and increasing sales in terms of quality loan applications, one can save precious time away from the laborious task of pushing papers and instead concentrate more on your clients' needs and demands.

- As a mortgage broker, one's capacity to process loan applications is exponentially increased while saving. Imagine processing more loans in less time, and reduce operational costs while at it!

Although one may be hesitant to outsource the tedious but crucial function of mortgage loans processing for varying reasons from efficiency to distance, these concerns will be alleviated when a mortgage professional works with an experienced outsourcing company with an exposure to mortgage processing , backed with the latest in information and communication technology.