In reviewing the recent blogs I’ve published on topics surrounding Best Practices and the pressures imposed on title agents by lenders and federal regulators, I realize most were anything but uplifting. For this reason, I wanted to share a blog highlighting a recent industry-related publication that contains some good news and indications that there may be more business in your future!
As we reflect on the real estate collapse of 2008, it’s clear that there is ample room to point fingers at a variety of players who significantly may have contributed to a host of bad practices which ultimately led to the industry meltdown. Some will blame borrowers for buying more house than they reasonably should have expected they could afford, but this desire was not new. In the period leading up to 2000, borrowers always attempted to secure loans for amounts beyond their ability to repay, but their attempts were kept in check by lenders who exercised conservative lending guidelines and simply refused to lend. But over time, lenders’ emphasis on conservative lending guidelines steadily diminished as radical changes occurred in the expansion of the secondary market for loans. With the development of new finance products like collateralized debt obligations, and a robust market to acquire subprime loans, lenders found there was an unending appetite to buy newly originated loans regardless of risk. As a result, lenders were able to minimize their focus on credit risk and refocus on short-term loan profitability arising from origination fees.
For the years leading up to 2008, the lending industry’s business model quickly shifted to maximizing the number of loans that could be generated with the belief that lenders could always resell them in the ever expanding secondary market. To meet these demands for more and more transactions, the use of independent mortgage brokers expanded. Read more