Mortgage Industry Trends

As I finish the analysis of Mastering Survival Integration – Achieving Success Beyond Traditional Operating Models using Outsourcing and Process Integration -- my February 2008 mortgage and FSI 100+ page report covering 200+ outsourcing processes across eight categories -- it is painfully apparent that more downward market changes will be forthcoming in 2008.  Presented across 50+ brand new diagrams, it has become very evident using analytics that the worse of the mortgage depression and credit unwindings are not over.  

We may have two, not one, bottoming events in 2008 due to the continual deterioration of markets and the influence of foreign investment (see SWF entry below – SWF’s the good, the bad, the reality).  The first will be at the end of Q1/early Q2 as the rebound (or lack thereof) doesn’t materialize.  Nervous management teams will quickly react with some additional staffing reductions but very little in terms of material or lasting changes.  They will also announce new asset sales and capitalization efforts.

The 2008 budgets were made in Q3 and Q4 2007 with the belief of a rebound in the investments and top line projections would be achieved starting at the middle of Q1 2008.  If this fails to materialize, and we believe those projections were overly optimistic, the corporate adjustments and desperation will come again.  This will take place at the beginning of Q2.

The second phase of unwelcome reality and waiting will last until early Q3 when if the markets don’t change, yet another second and this time more broad and deep set of cuts will arrive either signaling the start of a mild recession or a true bottoming of the current mortgage sector depression. 

The implications from this second round are somewhat obvious to downstream operations.  If you didn’t change your ops in Q1 2008, then the Q3 changes will be ugly.  Those organizations which shed the dogmatic processes and adopt what we are saying for integration and process improvement will have a methodical way out.  For the others who only made incremental changes and didn’t understand the need for process streamlining globalization, and outsourcing, they will be the causalities of industry by either being acquired or declaring bankruptcy – aka Survival Integration.