Lenders around the country have modest expectations for the coming year. But, the sky is not falling, according to a sampling of industry representatives.
MEMO TO THE MEDIA:
Things aren't as bad as all the recent crop of recession news stories imply. True, we are in a "meaningful downturn," but nothing earthshaking, and actually it is about what could be expected with the uncertainty created by Iraq, the budget battles, new taxes and the S&L crisis. But if reporters keep pushing bad news without a balanced perspective, they can make matters much worse than they are. As of now, 1991 won't be a terrific year, but it won't be a disaster either. Mortgage bankers are undertaking a number of innovations that should please the consumer and help jump start the market. But much depends upon whether the media covers the news with a balanced perspective.
TAKE A RANDOM POLL of mortgage bankers around the country, and the view expressed in the fictitious memo to the media is one you will hear time and time again.
William Corish, chairman of the board for First Virginia Mortgage Company, Falls Church, Virginia, says flatly that a recession psychology has been introduced into the public's mind. "Things would get a lot better if the Washington Post stopped writing about it," he says.
Corish's views are echoed by others in the mortgage lending business. Says Christopher E. Turner, executive vice president of Keystone Mortgage Company in Los Angeles: "The papers are making things seem far worse then they really are. They are scaring the pants off everybody. Some lenders are so scared they think they will suffer a default on every loan they make."
Indeed, spot checks with mortgage executives around the nation showed only one area--the Northeast--where times now are genuinely tough. A number of executives say the Southwest has bottomed out, is starting to come back, and may even come back strong. Few expect 1991 to be a good year and many say it won't be as good as 1990. But--unless prolonged war breaks out--they don't look for a disaster either. Many mortgage executives are optimistic about the future and anticipate a much healthier industry, and a few are trying out new market innovations.
Opinion is divided over how much a 1 point interest rate decline would help the market, and some executives see the new housing law as having a considerable impact on their lending operations.
All outlooks, of course, were contingent upon a peaceful solution to the Iraqi crisis. If war breaks out, all bets are off. Given that caveat, here's what a sampling of executives from around the nation thought in mid-November about business prospects for the near-term.
With headquarters in Philadelphia, Commonwealth Mortgage Assurance Company, a private mortgage insurer, has operations in 44 states. James C. Miller, president and chief operating officer, says his only concern at the moment is in the oil patch states, but even here he is "reasonably confident" the market won't go down any further. To help nurture the turnaround, Commonwealth plans more liberal underwriting in Texas and Oklahoma, and has default teams working with troubled...