While we had news today of the British Prime Minister resigning, yesterday my doctor asked if anyone in my family suffers from mental illness. I replied, "No, we all seem to enjoy it." Suffering from a lack of liquidity is the death knell for lenders and certainly nothing to joke about. Want to know the quickest way to shut your business down? Don’t return your warehouse bank’s phone call. In the secondary markets, if no one is interested in buying the products we’re manufacturing, that isn’t good news. So headlines of stories in the Wall Street Journal like, “Recession Fears Hit Risky Mortgage Debt Amid Default Concerns” are a real problem. (Subscription needed.) Housing and lending, “upstream” and “downstream,” is our focus, and economist Elliot Eisenberg summed things up. “With 30-year mortgage rates steadily climbing and now at 7 percent, it is unsurprising the NAHB Housing Market Index f
Camping: “where you spend a small fortune to live like a homeless person.” Lenders have done a remarkable job in the last few years trying to reduce homelessness in an indirect way, namely putting credit-worthy borrowers in well-collateralized properties in a compliant manner despite COVID. But let me get right to the point. It’s not good out there now for residential lenders, or their counterparties. After a remarkable, record-setting 2020 and 2021, the industry is now suffering, and companies are adjusting. (The current STRATMOR blog is, “Mergers and Acquisitions Continue On.”) We all knew the good times wouldn’t last forever, but the degree to which things have plummeted has been surprising. First the corporations were hit, then branches, and now mortgage loan officers (MLOs) are feeling the pain of a) very little business, and b) higher rates. Do IMB originators think that their 100 or 150 basis point commissions are untouchable, especially