What do mortgage lenders worry about?
One might think that macroeconomic trends would be uppermost in their minds, like what's happening to interest rates, to consumer confidence, to housing starts, to the tax deduction for mortgage interest.
But conversations with lenders attending the recent regional conference of mortgage bankers associations in Atlantic City suggest their concerns are more micro than macro.
One possible reason is that macroeconomic developments tend to affect the entire industry uniformly, while smaller, more localized developments directly affect each lender's competitive position and put pressure on already-thin profit margins.
While rising interest rates could eventually send more lenders back to thrifts for adjustable-rate loans, that point still appears quite distant, and speakers in Atlantic City issued reassurances that rates were likely to be stable in the foreseeable future.
On the micro side, a conference session about developing builder relationships attracted a substantial audience even while many attendees were slipping away to try their luck at the slot machines.
And the attendees got some grim news. They were told it's tough to form new builder relationships because:
*The line forms to the rear. Many others have already gotten into the act.
*Loan officers must devote full time to builder business, not mixing it with realty relationships.
*Long-term commitment is necessary.
*Top management must understand and support the business.
Another concern was the application of credit scoring. At a standing- room-only session, attendees seemed to accept that the technology can be valuable but, as previously noted here, they were afraid of making costly mistakes in applying the underwriting rules if they chose to override a poor score.
And finally, the Real Estate Settlement Procedures Act continues to be a major worry for many lenders. The big fear: that new rules now being drafted will drive a wedge between lenders and long-established referral networks.
