(At the end of this post, I ask for your participation in this conversation.  Please add your comments!)

Ok, I teased y’all in my last post and got a few complaints comments about leaving you hanging.  That was on purpose.  It’s a way to keep the story going from one chapter to the next and keep the conversation developing.  And that is what this meant to be, a conversation.  Heads up.

Here is “The Question.”

“What do you need to do to be absolutely certain you will thrive in the current and continuing Mortgage Crisis?”

That’s the question.  That’s the ultimate question right now and for the next 18-36 months.  You must become brutally honest with yourself if you expect to survive the next several years.  If you don’t aim to thrive, you will likely not survive.  The market is that brutal.  I am talking every day to loan officers that have 6+ years in the industry who are gasping for air.  Last week I met a 14 year veteran who is considering other careers because the combination of the factors listed below have taken a massive toll on his income.  This market shows no mercy.  Just look at the facts:

• HOME VALUES HAVEN’T HIT BOTTOM: According to Bank of America CEO, prices are predicted to decline another 15% nationally and 20% in CA and FL.  This further compounds LTV/Value issues in funding loans.  What’s your market like?
• THE SUBPRIME DEBACLE ISN’T THE ONLY LOAN CRISIS: Accelerated Option ARM recasts due to minimum payment induced negative amortization, combined with decreased values is another pot soon to boil over.  This chart and this article are one view of this story.  There are a myriad problems this will lead to; more foreclosures, credit constraints, further industry reputation backlash, and etc.  In addition, many agency and Alt-A arms will start to recast as well which could simply extend the crisis through 2010 or increase the crisis.  Either way, it makes sense to pay attention to the data.  What do you think is the best way for your business to respond to this?
• WE’VE CREATED SQUARE PEG BORROWERS BUT ARE BACK TO ROUND HOLES: The expansion of mortgage products and loosening of guidelines has created borrowers that are square pegs… which in itself is ok.  Making home ownership easier is a good idea.  But, now with most “creative” loan programs going away and guidelines tightening, we have round holes that don’t fit the legacy of borrowers that are left behind.  Just recently, the mainstream media has begun to report on this.  What are you doing today to make sure your borrowers become fundable prospects in the future?
• MARGINS JUST AIN’T WHAT THEY USE TO BE: Most of my evidence regarding this fact is anecdotal, but my friends who originate tell me that the days of 2 points in margin are long gone… it’s more like .75bps or 1 point if you are lucky.  Cutting prices by 50% is brutal on any business.  Maybe you are different… if so, let us know how you are creating magic!
• “REAL ESTATE IS LOCAL” HAS NEVER BEEN MORE TRUE: Last week I met some people from Stockton, CA who have seen their home’s value drop by 40%.  40% isn’t massive, it’s CRAZY massive. I even talked to a young lady who’s Condo in Florida, purchased at the top of the market, has lost 50% of it’s value.  Then, I look at my neighborhood in Colorado.  We’ve maybe dropped 5%-7% in the last 2 years. This means that a market strategy that works in Colorado won’t necessarily work in Chicago or California.  What’s your neighborhood experiencing?  How are you adjusting your strategy?

The bottom line is that finding fundable loan opportunities will likely get harder, not easier.  So, if you think it’s hard now, then you best prepare for even harder times.  And if you thought you had made it through the worst, you might want to recheck your fuel gauge as there are steeper hills ahead which will consume more gas during the climb.

Stop for a moment and think about this and respond.  Did I cover all the problems or are there more?  What do you need to do to be absolutely certain you will not just survive, but thrive?  I could have easily posted “Matt Bowe’s 5 easy answers to prospering your mortgage practice.”  But let’s get real.  The easy answers are gone.  Thoughtful discussion and critical conversations are what we need.  And finding what is working for others and seeing if the shoe fits in your market is more important than ever.  This is a conversation, so I’m going to stop here and listen.  Hint… class participation time.

Do you have the answer?  If so, share it by leaving a comment.  If not, then post a comment about what’s on your mind and why you feel uncertain and how your experience compares.  Did I miss something?  Do you want to add something?  It’s a conversation I’m trying to start with y’all.  Time to talk!  The more comments and information we share the more we’ll all benefit.

In my next post, we’ll explore the online and offline answers (that everyone wants to have) on how to get certainty so you thrive in these brutal and unforgiving times.