The Subprime Market - Why Is It Collapsing?

Home Loans

The Subprime Market - Why Is It Collapsing?
(presented by www.refinance-refinance.net - mortgage lenders)

The sub prime market is declining due to a high rate of foreclosures. These foreclosures are the result of the proliferation of stated income loans that allow borrowers to multiply their real income on papers. The problem is larger than we think. On a loan, there are so many partners involved and each partner is there to make sure the loan closes. A non exhaustive list will show mortgage brokers and loan officers, loan processors at mortgage companies, account executives, bank processors, underwriters, title companies, appraisers, and realtors. Everyone is there to make money and there is no money if the loan does not close for most of the parties involved, except for the appraiser that earns his or her money upfront. That explains why there have been so many bad home loans.

I would like to point out the fact that our economy is based on results, not on processes. As long as a manager can show a number of loans that exceed the company’s quota, upper management is happy. We need to shift from a result oriented management to a process oriented management. I have seen so many irregularities in the American companies just because employees have to show quantity instead of quality. This management culture has caused so many problems to American companies.

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We have to learn our lesson. Companies that will survive are those that can make a difference between quantity and quality. Quality should prevail over quantity in our economy. The collapse of many giants in the mortgage industry may be a good thing for the future of the mortgage industry. The survivors will be more careful in approving mortgage loans and we will see fewer foreclosures.

We have to learn from our mistakes. We have to stop writing loans to borrowers that do not have the required income. Let discipline our practices while waiting for a better market.

Any question, visit www.melphis.com for more information.

The Mortgage Doctor

Melphis Mortgage

A Higher Level of Service

Tel. 954-485-5590

www.melphis.com

Ernst Louis-Jacques, M.B.A
Mortgage Planner/Motivational Speaker/Business Consultant
Melphis Mortgage
http://www.melphis.com

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This entry was posted on Thursday, May 3rd, 2007 at 2:05 pm and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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