Q: I am starting to get nervous about my position.  I love what I do and I did work when the market was not so good.  I guess my main worry is so many refinanced at such a low rates and would we ever have rates like that again?  Will we have to wait 40 yrs?  I feel in my heart there is enough business out there however it will be more like cut throat now and that I do not like.  What do you suggest I do?  Do you think Internet leads will still be good then?  Internet Leads have almost tripled my income and it has saved me a ton of money because I am not driving around, spending on marketing materials etc.  I am averaging 1 or 2 out of 5 I purchase.   

Kelly and about 100,000 other loan officers (Okay, I exaggerate)

A:Well, I am sure you have said a mouthful for many others in the industry right now. It may be some consolation to know that many are wondering the same thing (only five or six wrote me, however). Your question is too involved to answer in one column—but it is very important—so I will try to dedicate a few to the issue.

First, I have been in the industry for 25 years (yes, I started when I was 12). There have been cycles such as these for 25 years. The larger the up cycle--and this was the grand-daddy of all refinance binges--the sharper the down cycle. I should not say was—since we have no evidence that the refinance boom is over.

Second, the next down cycle, when it comes, will be different. We now have large segments of the industry that are not as rate sensitive (subprime, seconds, cash-out) as well as a myriad of ARM products that consumers can choose when rates are not to their liking.  Consumers tend to refinance more often than before because of the existence of yield-spread premiums. All these factors have served to make the market larger—regardless of interest rates.

On the other hand, the growth of the mortgage broker industry has made it easier for everyone and their brother to get in the mortgage business—without proper training I might add. And these brokers are selling these loans to large entities that will become the competition for the next loan from your customers. Twenty years ago the top 20 mortgage companies in the nation did not have a ten percent market share.

In every down cycle, the stronger loan officers survive and get strong in the long run (but not with out pain). They do so because—

• They are experts and leaders within their industry;
• They have long-term relationships and provide value;
• They are diversified.

Next week I will start to examine these “X” factors-and we can relate them to the issue you are facing.

    Dave

Dave Hershman is the leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School, the most advanced comprehensive curriculum in the industry, and is a top industry speaker. For more articles by Dave, free marketing materials and a schedule of classes, visit www.originationpro.com.