Back in 2006, an instrument known as the “mortgage implode-o-meter” came into existence. Industry professionals, including myself, were constantly monitoring this tool just to determine if our jobs would be waiting for us the next morning. Mortgage companies were going out of business and doing extensive layoffs.
Fast forward to today: With all of the interest rate compression that I’ve highlighted recently, less money is being made in the industry. Companies are resorting to scalebacks and getting creative with their operational methods to keep their doors open and provide top-grade customer service.
The truth of the matter, though, is that a lot of lenders have been working at losses over the last six months or so. These particular lenders didn’t know how to sufficiently prepare for the changing market nor do they have the reserves and, as a result, the implode-o-meter has made a return.
To be sure, bad lending practices aren’t the culprit here; the pre-existing losses mentioned above are causing lenders to lose their reserve requirements, and if they’re not turning a profit in two calendar quarters of the year, they’ll lose access to their warehouse funds.
In delivering this message, I just want to make sure that you have a great relationship with your loan officer and that you’re protecting your interests by researching the company you’re working with.
On that score, you can take comfort in knowing that we at Success Mortgage Partners are stable and closing loans each and every day, and we’d love the opportunity to see you at the closing table.
If you or anyone you know have any questions about the mortgage industry and how it could affect your new home purchase, please reach out to my team by phone at 352-242-1535. We very much look forward to speaking with you!