My Way Lending

Yeah, I’ve got the typical New Year’s Resolutions - like eat less chocolate, exercise more etc., but I thought I’d share what I’m calling my “Mortgage Resolutions.”  

I hope you had a wonderful Christmas and a great time with family.   I think I could describe my Christmas as too noisy, too busy, and too fast, but very good.  It’s times like Christmas which help reinforce the things that are really important in life.

I thought I’d take a little bit of a different approach this week and rather than talk about what’s been happening this week, I thought I’d share some “New Year’s Resolutions” about 2008 and the real estate and mortgage markets:

1. Since the real estate and finance worlds are in a state of turmoil, I resolve to take the time to remain educated on what’s going on so as to be a valuable resource for customers, Realtors, builders, blownmortgage.com readers and other referral sources who are navigating their way through real estate transactions.

2. As there are a lot of adjustable rate mortgages still “out there” and, as I believe rates could very well drop this year, I resolve to be organized and proactive to help people take advantage of making sure they have the right mortgage for their situation.

3. I resolve to be a “realistic optimist” this year.   I’m not going to be one who is a “cheerleader” for the real estate industry or one who says that all is well and nothing is changing in the mortgage world, but I am going to attempt to focus on the opportunities that today’s market does present.

4. In a market with constantly changing rules and regulations, I resolve to remain on top of the changes so that I can provide honest and accurate assessments of what can be done and then stay on top of the details so that the deals get done the way we plan them.   This year’s market calls for early and realistic understanding of what can and can’t be done, and I resolve to be able to provide that.

2008 is going to be an interesting year.   There will be a a lot of changes and a lot of challenges, but I’m looking forward to it.  Have a Happy New Year!

Tom

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“The cold, hard truth is that foreclosures are serving only to hasten the painful process of shifting housing prices back to a level the market can sustain. Prices must and will fall. Everywhere. Probably 25% to 30% from their peak.”

In today’s (December 28, 2007) Los Angeles Times, Christopher Thornberg made the above statement.

Mr. Thornberg used to be a Senior Economist with the UCLA Anderson Forecast.  He’s now with the Beacon Economics Group, a research and consulting firm specializing in analyses of real estate markets.

Mr. Thornberg is not a paid mouthpiece for any special interest group.  In other words, he’s a pretty sharp guy.  I’ve followed his research for years and it’s never popular because it’s unbiased and honest.

And he is predicting a 25-30% decline in real estate prices due to one simple fact – prices have outpaced income.

This isn’t rocket science folks.  How many of you could qualify (on paper) using standard Fannie/Freddie full doc underwriting to purchase your own home today?  That’s what I thought.

The worst part of his forecast is the self-fulfilling prophecy of real estate prices.  Who would buy a home today that will probably be worth 10% less next year?  How about 20% less two years from now?

Add this together with the weekly tightening of underwriting guidelines we are all experiencing, lenders moving towards larger down payments and fully documented loans, increased inventories, and the avalanche of REOs right around the corner and what do you get? 

It’s Econ 101 all over again.  Increased supply of homes (inventories) coupled with less demand from home buyers equals a decline in real estate prices. Guaranteed. You can argue all you want, but I’m not making this story up.  The market is telling us what will happen. 

You can see the writing on the wall and deal with it.  Or you can stick your head in the sand and pray your LA/OC/Bay Area home doesn’t drop in value. 

There will always be people buying and selling homes.  There will always be people needing to refinance their homes.  There will always be people needing home equity loans. 

The question is — what are you doing to position yourself as the lender to those people in 2008?

Or are you going to sit and stare at the phone, waiting for it to ring?

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Seth Godin is one of my favorite authors, unknowing mentor and personal hero.  He has a great post from a couple of years ago that he quoted for his last post of 2007.  His question is “Why not be great?“  To all of us that have tracked the implosion of this market, the epic shifts in business and the everchanging tides of finance, regulation, legislation and more - now is the time to embrace Seth’s advice.

This isn’t my last post of 2007; but it surely is important.  Here’s Seth on something we should all do (read his whole post - it’s worth the time):

 Are these crazy times? You bet they are. But so were the days when we were doing duck-and-cover air-raid drills in school, or going through the scares of Three Mile Island and Love Canal. There will always be crazy times.

So stop thinking about how crazy the times are, and start thinking about what the crazy times demand. There has never been a worse time for business as usual. Business as usual is sure to fail, sure to disappoint, sure to numb our dreams. That’s why there has never been a better time for the new. Your competitors are too afraid to spend money on new productivity tools. Your bankers have no idea where they can safely invest. Your potential employees are desperately looking for something exciting, something they feel passionate about, something they can genuinely engage in and engage with.

You get to make a choice. You can remake that choice every day, in fact. It’s never too late to choose optimism, to choose action, to choose excellence. The best thing is that it only takes a moment — just one second — to decide.

Before you finish this paragraph, you have the power to change everything that’s to come. And you can do that by asking yourself (and your colleagues) the one question that every organization and every individual needs to ask today: Why not be great?

In fact, it’s a great message for whatever you do.  Why not?

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