"Minnesota Mortgage Association President Tim Bendel said his industry has taken a hit, too. Brokerage license applications came up for regular review at the end of last month, Bendel said, and early indications are the number of licenses dropped from 4,000 to about 1,400." (Strib)
When mortgage interest rates went down a few years back many people refinanced their home mortgage. The demand for lenders went up. Few loans are being written these days so where will the 2600 local lenders who decided not to renew their licenses go?
I have an idea. Perhaps the over worked REO* departments at some of the local banks will add staff. That would help the economy by providing jobs and by making it possible for the banks to actually sell the properties that they own instead of leaving them abandoned and vacant becasue there isn’t anyone at the bank who is actually available to return a phone call or make a decision. The inability of banks to sell real estate is hurting us all. REO properties are on the market longer than any other type of property.
The license renewal process is different for Realtors. We should have some idea how many Realtors we will have next year after MAR (Minnesota Association of Realtors) adds up the dues collected. According to MAR we have 40% more agents than we need. I have to say I have been trying to get some numbers on this for a month now and am only getting some vague responses from the local boards. (Greg if you are reading this, feel free to chime in).
*Real Estate Owned. Property which is in the possession of a lender as a result of foreclosure or forfeiture.
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This will get worse. Citigroup is discussing 45,000 layoffs. Now, most of these are not likely related to the mortgage sector, but it shows how deeply the finance sector is going to get clobbered. ResCap, in Minnesota already laid off 400, if I remember correctly.
Going forward, the result of this is that we will have decreased need for finance sector workers for some time. Loan securitization is not going to be anywhere as prevalent as before. Hence, no-doc loans, high LTV with lower FICO, all of the funny-money mortgages are a thing of the past. Perhaps future generations will forget the lessons we are now learning and repeat them. It won’t be soon. Many large lenders are tightening their operations with brokers. Wholesale lending will decrease as more of these lenders go direct to the borrowers.
Warren Buffet said that until the tide goes out, you do not know who is swimming naked.
The tide of easy money is receding, and those who have dealt wisely with their financial decisions will be found to have their bathing suits on. People who stretched too far in the mistaken belief that Property is a sure-fire investment that never goes down will not fare as well.
Excessive use of credit has allowed many Americans to be economic imposters – living far above their means.
The cash-out refi business was no small part of this.
I look forward to buying a home in an environment where housing is viewed as a nice place to live, and not as a hot stock to be flipped, or a financial asset to be leveraged in order to buy a boat or vacation.
Patient_Buyer
Would this have anything to do with the Legislature’s overhauling of the state’s mortgage lending statutes this last session? I know they increased the license application fees by 250 percent — at the recommendation of the Commerce Department — and tightened some of the various requirements. I believe the goal was to make sure mortgage lenders have a solid financial footing. I wouldn’t be surprised if that explained a lot of the dropoff.
Nick – license fees and a bunch of requirements including educational requirements were increased. lenders are supposed to make sure borrowers have the resources to pay back loans to. I think the intent was to get some to quit, or make it hard to stay in.
Patient Buyer – we are really seeing things tighten up. it takes longer than ever for a loan to get approval and lenders are being more cautious. Consumers have not changed all that much. They will still borrow as much money as they can as often as they can so they can get what they want. This holiday season many will accumulate debt that will take all year to pay off.
Thanks for this great post Teresa. We are seeing similar issues down here. Many banks price the homes way too high and they just sit and sit. You would think they would be wise enough to list to sell. It is beyond me to understand their thought processes. I wonder if we’ll ever see the education requirements for real estate agents become tougher? Thanks – Karl
I thought I read someplace that mortgage lenders employed by banks do not need to licensed and that many loan officers were moving over to work for banks. I could be wrong, a cursory such didn’t turn up a link.
If this is correct, the number of licenses isn’t the best measurement of the number of people selling mortgage loans.
Either way, it’s long past time to thin the ranks of the least qualified loan officers. The true professionals will survive a few lean years, and those in it for a quick buck will move onto something else.
Speaking as someone who has to leave his home of over ten years thanks to the failures of a Deadbeat Landlord, I’d like to remind everyone for the record that all those REO’s out there represent people who were kicked to the curb by this unique admixture of greed, negligence, and willful ignorance that we collectively call the Mortgage/Credit Crisis. I just wish the financial agencies supposedly in control of all this locked up capital would bite the bullet and deal with it, instead of just hiding the garbage off balance and pretending it doesn’t exist.
It’s not unthinkable that we’re going to reach a point where one out of every twenty properties in this country is vacant — probably significantly higher. These houses need to be lived in, before they start to degrade to the point where something worse HAS to happen to them.
I had a conversation with Steve Magner, the head of the St. Paul Code Enforcement Division, a couple of months ago, and he sounded like he was getting ready to line these properties up like bowling pins and swing a full frame of wrecking balls right down their alleys.
It comes as no surprise that the number of REALTORS is dropping. As a member of NAMAR, the Northeast Atlanta Metro Association of REALTORS, when I paid my dues in October I was informed that there was a significant number of our membership that were not renewing.
On the mortgage side, we had some good news yesterday and I hope it is there for you also. 30 year fixed rates at 5.5%. I would like to think that this low rate would spur the market a bit.
It comes as no surprise that the number of REALTORS is dropping. As a member of NAMAR, the Northeast Atlanta Metro Association of REALTORS, when I paid my dues in October I was informed that there was a significant number of our membership that were not renewing.
On the mortgage side, we had some good news yesterday and I hope it is there for you also. 30 year fixed rates at 5.5%. I would like to think that this low rate would spur the market a bit.
Great information and I do belive things will get better before it gets worse!