Tuesday, January 19, 2010
Monday, January 18, 2010
I saved a few articles for my real estate peoples... Some gloom, some doom and some rays of absolute SUNSHINE, http://ow.ly/Y1Cm
Friday, January 15, 2010
New Warehouse, Correspondent Lender May Emerge
New Warehouse, Correspondent Lender May Emerge: "As the credit crisis was in full swing, warehouse lending capacity tumbled 85 percent -- from $200 billion in 2007 to around $20 billion in 2008, according to industry data. But just as warehouse lenders had exited the market in 2008, new players expanded or emerged in 2009. The latest to do so was MetLife Home Loans -- which told MortgageDaily.com that it is exploring entering warehouse lending and corresondent lending."
Tuesday, January 12, 2010
"Lay straight the path..." -- Originations to fall 40% in 2010!!!
We’re only two weeks into the new year (and decade) and the predictions are flowing…just not the good kind.
The Mortgage Bankers Association said today it expects residential mortgage originations to fall 40 percent in 2010 from last year to their lowest level in a decade. The group believes banks and mortgage lenders will originate just $1.28 trillion in home loans in 2010, down from $2.11 trillion last year. The anticipated total would be the lowest since 2000, when a paltry $1.14 trillion was recorded.
It’s slated to get even worse in 2011, with just $1.22 trillion in home loan lending volume expected, before reversing course and climbing to $1.4 trillion in 2012. Of course, 2009 threw the numbers way out of whack, thanks to the refinancing bonanza that took place in response to the record low mortgage rates on offer.
Refinancing accounted for roughly 65 percent of total activity last year, but is only forecast to grab a 40 percent share this year.
Perhaps because the MBA sees 30-year mortgage rates increasing throughout the year to end 2010 at a not so desirable 6.1 percent. Meanwhile, purchase activity will see a less-than five percent rise from 2009, before really taking off in 2011 and 2012.
The news spells trouble for those Originators hired just to handle the surging loan volumes in 2009, as banks will surely need to “rightsize” staff. So it really sounds like the "Pay for performance" pay plan companies like BofA & Wells, to name a couple, might not be the most advantageous opportunities for employment in the future. But, at least in the coming business environment the big boys should be able to handle their loan volume and meet their own lock agreements for a change.
Originators should think long and hard about the over-all picture when working for these companies and the like. Shrinking loan volume and fewer opportunities for business leaves one to ponder the advantages of working for a company that sets commission structures that penalize rather than reward on the basis of "THE BRAND" raking in the business and discounting the importance of the individual employee as the real revenue stream. A company's brand name won't bring you sales and originations that simply don't exist and surely, when it doesn't, don't count on the company to change the pay structure to allow for originators to make more from less loan volume. It's just not how they became the shining example of banking that they have all become.
The Big Banks are interested in "Credit Quality = Bond Value = Stock Price", and virtually nothing else. Tightening credit guidelines upgrade the value of their portfolio, a squeaky clean credit portfolio increases the value and rating of the securities/bonds and AAA Rated Bonds bring investments to the company and investment makes the company's stock more desirable, driving the stock price up and la-di-da di-da....
Here's the point of my rambling, "A monkey in a suit, or even a pair of blue-jeans can be an order taker", all it takes is a little training, a couple of scripts and a bunch of bananas (promises). Think about it, how many customers w/ 740+ credit scores and money for a down payment have you screwed up in your tenure? Not many right.. some but not many, they are "no brainers", easy loans. Quality originators become expensive to hang on to in times like we are about to go through, the worst is definantely yet to come in the origination world.
With credit quality so tight and becoming tighter, the job actually becomes much easier and their is much less need for the Top Tier Originators especially in the ridged Play Book - Sales Process oriented world of the Big Banks. It's just a guess, an educated guess, but I see more and more "Order Takers" filling the originator's role for these vertically integrated juggernauts in the near future and making far less doing so; in the whole "Pay for Performance" scheme of things anyway.
In my opinion, and it's only my humble yet accurate opinion, the safe money is on the well operated, debt free and privately held lenders and mortgage banks as far as well paying origination opportunities are concerned. No stockholders to consider over employees, no gimmick commission structures or hidden agenda to manipulate profitability, always at the expense our customers, in order to pay the masses of thankless, thoughtless blunderers with VP at the front each title.
Yes the smart money is to go where you are appreciated and rewarded loan by loan, where commissions and bonuses are clearly defined... even retro-active for accomplishing long term goals. Independent companies that encourage personal business growth because they realize that the company's growth is achieved through you and your long term success and your good name, not the monthly race to the finish or lose half of a months income because your total volume falls $200 short of the next tier. After all, what's $200 when you're talking about $1M or 2... I'll tell you what it is, a technicality!
There are companies out there that don't do business that way, the burden is on though to find one. If you find yourself in a position similar to my description (or rant, whichever you prefer) and you know who you are, take the time to find yourself - a different kind of company, where people come first. They do exist and they want to hire you, in fact would be happy to have dedicated, productive people on their team.
But first, you have to realize that you have a problem... don't drink the kool-aid.
The Mortgage Bankers Association said today it expects residential mortgage originations to fall 40 percent in 2010 from last year to their lowest level in a decade. The group believes banks and mortgage lenders will originate just $1.28 trillion in home loans in 2010, down from $2.11 trillion last year. The anticipated total would be the lowest since 2000, when a paltry $1.14 trillion was recorded.
It’s slated to get even worse in 2011, with just $1.22 trillion in home loan lending volume expected, before reversing course and climbing to $1.4 trillion in 2012. Of course, 2009 threw the numbers way out of whack, thanks to the refinancing bonanza that took place in response to the record low mortgage rates on offer.
Refinancing accounted for roughly 65 percent of total activity last year, but is only forecast to grab a 40 percent share this year.
Perhaps because the MBA sees 30-year mortgage rates increasing throughout the year to end 2010 at a not so desirable 6.1 percent. Meanwhile, purchase activity will see a less-than five percent rise from 2009, before really taking off in 2011 and 2012.
The news spells trouble for those Originators hired just to handle the surging loan volumes in 2009, as banks will surely need to “rightsize” staff. So it really sounds like the "Pay for performance" pay plan companies like BofA & Wells, to name a couple, might not be the most advantageous opportunities for employment in the future. But, at least in the coming business environment the big boys should be able to handle their loan volume and meet their own lock agreements for a change.
Originators should think long and hard about the over-all picture when working for these companies and the like. Shrinking loan volume and fewer opportunities for business leaves one to ponder the advantages of working for a company that sets commission structures that penalize rather than reward on the basis of "THE BRAND" raking in the business and discounting the importance of the individual employee as the real revenue stream. A company's brand name won't bring you sales and originations that simply don't exist and surely, when it doesn't, don't count on the company to change the pay structure to allow for originators to make more from less loan volume. It's just not how they became the shining example of banking that they have all become.
The Big Banks are interested in "Credit Quality = Bond Value = Stock Price", and virtually nothing else. Tightening credit guidelines upgrade the value of their portfolio, a squeaky clean credit portfolio increases the value and rating of the securities/bonds and AAA Rated Bonds bring investments to the company and investment makes the company's stock more desirable, driving the stock price up and la-di-da di-da....
Here's the point of my rambling, "A monkey in a suit, or even a pair of blue-jeans can be an order taker", all it takes is a little training, a couple of scripts and a bunch of bananas (promises). Think about it, how many customers w/ 740+ credit scores and money for a down payment have you screwed up in your tenure? Not many right.. some but not many, they are "no brainers", easy loans. Quality originators become expensive to hang on to in times like we are about to go through, the worst is definantely yet to come in the origination world.
With credit quality so tight and becoming tighter, the job actually becomes much easier and their is much less need for the Top Tier Originators especially in the ridged Play Book - Sales Process oriented world of the Big Banks. It's just a guess, an educated guess, but I see more and more "Order Takers" filling the originator's role for these vertically integrated juggernauts in the near future and making far less doing so; in the whole "Pay for Performance" scheme of things anyway.
In my opinion, and it's only my humble yet accurate opinion, the safe money is on the well operated, debt free and privately held lenders and mortgage banks as far as well paying origination opportunities are concerned. No stockholders to consider over employees, no gimmick commission structures or hidden agenda to manipulate profitability, always at the expense our customers, in order to pay the masses of thankless, thoughtless blunderers with VP at the front each title.
Yes the smart money is to go where you are appreciated and rewarded loan by loan, where commissions and bonuses are clearly defined... even retro-active for accomplishing long term goals. Independent companies that encourage personal business growth because they realize that the company's growth is achieved through you and your long term success and your good name, not the monthly race to the finish or lose half of a months income because your total volume falls $200 short of the next tier. After all, what's $200 when you're talking about $1M or 2... I'll tell you what it is, a technicality!
There are companies out there that don't do business that way, the burden is on though to find one. If you find yourself in a position similar to my description (or rant, whichever you prefer) and you know who you are, take the time to find yourself - a different kind of company, where people come first. They do exist and they want to hire you, in fact would be happy to have dedicated, productive people on their team.
But first, you have to realize that you have a problem... don't drink the kool-aid.
Sunday, January 10, 2010
Subscribe to:
Posts (Atom)
Posts
