Change abounds, and it dictates if you will grow or move along

Mitch Harmann, team manager, USA Funding Corp.

As published in Scotsman Guide's Residential Edition, December 2009.

As this year comes to a close, it's a good idea to look ahead at trends that will affect the mortgage industry in the coming year and beyond.

Clearly, the mortgage industry is at or near a low point. How long we will stay at that point -- or if it will get any lower -- remains to be seen.

Whatever happens, brokers must assess their business and position themselves for a future that could include more originations and higher interest rates.

Because any uptick in the economy or housing market should result in more business for brokers, you may want to consider two options:

1. Hiring more employees to handle increased volume and to remain competitive.

2. Retiring from the old way of doing business, perhaps by joining a larger lender that can meet new compliance and regulatory requirements.

As you likely know, the yield-spread premium is a regulator target, and brokers shouldn't be surprised if it goes away or is changed significantly. If it does, can your business succeed on origination fees alone?

An interest-rate increase also seems inevitable. Record lows can't be sustained in any cyclical business, and mortgage rates are no different. When it comes to rates, brokers should work toward and promote reasonable increases that don't catch borrowers off-guard or out of breath.

Moreover, if wages increase, higher interest rates may be affordable. Many experienced professionals have worked through higher-rate environments in which demand did not evaporate.

It also seems unlikely that home values will increase drastically any time soon. A continued trend of lower home prices should increase affordability for some time to come.

Another trend that has affected and will continue to affect the mortgage industry comes via technology, which offers opportunities for better customer service and interaction. Many brokers anticipate closing their loans electronically without the use of printed documents. Another possible development is a virtual closing, using live online-telephone and -video services.

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