Mortgage Industry Trends

Once upon a time in a land far away, there lived a homeowner – happy amid rising market prices, a large HELOC, and with variable loan terms.  The home owner was created by an originating banker confident in expanding and complex credit instruments, and an ability to provide loans to those with “less than perfect” documentation or collateral.  It was a good world for both as it improved their standard of living and personal wealth.  For nearly a decade, this fairytale repeated itself in community after community without apparent barriers and risk – or so it was thought.

The dream has turned into a nightmare for many a banker and more importantly, for many a homeowner.  Caught in a current of sweeping delinquencies and foreclosures reaching a historical level of 2.04 percent of all loans, the long shadow of market actions and credit crisis is casting its darkness into every corner of the economy – both domestically and internationally.  With housing prices nationally set to fall on average by up to 25%, it appears that it was a fools bet in thinking the market was economically inelastic. 

“I Heard the King was Dying…”

For the mortgage industry and the skilled professionals within, “rumors of our death have been greatly exaggerated.”  While the fairytale is no more, the reality of the future is where the promise and reinvention resides. We have a great opportunity in this time of crisis and layoffs to recast ourselves and industry in a far better framework then we have had in 20 years. 

We need to shed the archaic processes and dogmas that have resided in our supply chains from qualifications, to origination, to servicing, to securitization, and back – aka a reverse supply chain. 

We need to embrace the fact that in our new competitive world it is no longer about competitor versus competitor – it is about orchestration versus competition.  It is about embracing the need for “capital light” organizations rather than fixed cost, not-invented-here operations. 

Let’s face it, until we shed our old beliefs, we cannot hope to move beyond them or even compete in a compartmentalized flat world.  Technology is not the singular answer – without radically adjusted processes, new business models and orchestrated supply chains, investments in new solutions may simply facilitate faster organizational bankruptcy. 

So what are you doing to reestablish yourself and/or your organization?

Mark Dangelo