Scotsman Guide - June 2011 Residential Edition

From the Editor

BY IVANNA C. SUKKAR, EDITOR

It’s often saId that to succeed and stay ahead of the game, you must
change wIth the tImes. thIs advIce seems especIally relevant to mort-
gage brokers these days.

In fact, the mortgage-brokerage industry has seen some of the biggest changes in the past few years. just look at the industry’s employment data: The number of mortgage brokerages nationwide went from 53,000 in 2006 to an estimated 12,000 in 2010, according to a recent Access Mortgage Research & Consulting Inc. study ( sctsm.in/4345). That’s a decline of more than 77 percent.

To stay in the mortgage business, many brokers have indeed been changing with the times — and turning to branch opportunities and retail banking. This is nowhere more evident than the pages of Scotsman Guide. In fact, we’ve seen an increase not only in advertisers promoting their branch opportunities but also in editorial content on the topic.

With that in mind, we decided to address this change in the industry and dedicate much of this month’s content to branch- and banking-related articles. Obviously, there’s a lot to consider when making such a significant change as going from broker to banker, from regulatory and compliance issues to the paradigm shift that comes with such a transition. And surely, many brokers will decide that they prefer — and are able to — stay on the brokering side of the industry.

Mark Buskuhl of Southwest Funding LP lays out many of these considerations, including the pros and cons of becoming a banker, in his article on Page 21. If you are thinking about making the shift, you also have the decision of whether to join a national banker or a local one. On Page 36, LoanSouth’s Kim nelson discusses the benefits of joining a community bank. And in this month’s BackSpace column (Page 59), associate editor jennifer E. Garrett discusses some of the key differences between being a broker and being a branch operator.

Whatever your choice — whether you remain a broker or take the leap to banking — we all know that the recent (and ongoing) regulatory changes, as well as changed lending products, make the industry’s future less than certain. Ken Lambert of Ken Lambert Mortgage Enterprises Inc. offers his forecast of where mortgage products may be headed on Page 26.

Looking at the mortgage industry as a whole, there was a 51 percent decline in employment from the peak in February 2006 through this past February, according to Bureau of Labor Statistics data. It’s likely safe to say those who remain — brokers and bankers alike — have mastered the art of changing with the times.

ivannas@scotsmanguide.com

NEXT MONTH

… in July’s Scotsman Guide

• Underwriting and your
quality-control reviews
• I do: How weddings can
lead to home financing
• Mortgage insurance and
the distressed-property
market
• Spotlight: Missouri after
the storms

… and much more.

Online? Check out current and past editions of Scotsman Guide at scotsmanguide.com.

TIP OF THE MONTH

Avoid credit surprises

Have you ever asked clients to pay off an old debt then watched their FICO score drop?

This can occur because negative defaults become current when new payments occur. Instead, help clients negotiate with collection agencies and others. As part of any agreement, require the deletion of old accounts.

Credit scores underpin your success. Know how to restore them or team with a company that does.

— ELIzABETH KARWOWSKI GET CREDIT HEALTHy EXPERTS@GETCREDITHEALTHy.COM

In the Past Month
Pending sales up;
new-home sales stuck

WASHInGTOn, D.C. — Pending U.S. home sales rose modestly this past March, climbing for the second consecutive month, the national Association of Realtors (nAR) reported.

“Since reaching a cyclical bottom last june, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” nAR chief economist Lawrence Yun said.

nAR also reported existing-home sales rose 3. 7 percent from this past February to March. Total sales of single-family homes, townhomes, condominiums and co-ops rose to a seasonally adjusted annual rate of 5.1 million in the month, continuing what nAR called “an uneven recovery.” Meanwhile, the U.S. Commerce Department reported that sales of new single-family homes in March remained far below sales from 12 months earlier. At the March rate of sales, it would take 7. 3 months to deplete the new-home inventory, the Commerce Department reported.

According to some researchers, fewer new single-family houses are being sold in the U.S. than at any point since 1963.

Next;release Existing-home sales: June 21 new-home sales: June 23 Pending home sales: June 29

Case-Shiller: Home prices still falling

nEW YORK — U.S. home prices dropped this past February, according to the S&P/Case-Shiller Home Price Index. The 10-city composite index showed prices 2.6 percent less than a year ago, while the 20-city index was off 3. 3 percent over the 12-month stretch.

“There is very little, if any, good news about housing,” S&P index committee chairman David Blitzer said. “Prices continue to weaken, trends in sales and construction are disappointing.” Prices in Atlanta, Cleveland, Detroit and Las Vegas were below their 2000 levels. Phoenix barely avoided joining that group.

Washington, D.C., new York, Los Angeles and San Diego, meanwhile, held on to some of the large gains experienced before the downturn.

The national Association of Realtors reported the national median price for all housing types was $159,600 this past March, down 5. 9 percent from March 2010.

The Commerce Department said the average sales price for a new home sold in March was $246,800.

Next;release

S&P/Case-Shiller Home Price Index: June 28

U.S. wages reach 82-year low point

WASHInGTOn, D.C. — Financial analysis conducted by USA Today found U.S. wages as a percentage of personal income were at their lowest point in 82 years in 2010.

Wages made up 51 percent of personal income last year, while government payments hit a record 18. 3 percent, as unemployment benefits, rising health-care costs and a sluggish economy pushed the figure higher, the newspaper said.

Government aid came out to an average of $7,427 per citizen last year, more than double the $3,686 average from 1990, with figures adjusted for inflation.

Farkas guilty of $2.9 billion fraud

RICHMOnD, Va. — Ex-Taylor, Bean & Whitaker chairman Lee Bentley Farkas was convicted in a $2.9 billion mortgage-fraud scheme that helped sink Colonial Bank.

Farkas was found guilty on one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud following a 10-day trial. He is to be sentenced july 1.