What happens to us in 2008?

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With WaMu and Countrywide “on the ropes,” but giving us that dreaded assurance that “everything is fine,”  what’s going to happen in 2008 for the industry and Originators?   It seems that only Freddie Mac has a picture of the depth of the situation that we’re in, while much of our reeling industry sees something like a Recovery in 2008.

I want to know what the truth is gonna be in 2008–and I don’t have all the answers.   My basic assumptions:

1. 75% of the people employed TODAY in retail mortgage banking are gone.
2. Loan To Value will be capped at 80% for most loans.  This will be done because  MI will double or more in price, seeing as MGIC is only being saved (through no fault of their own) by the fact that the worst of the loans were done on 80/20 combos.
3. Only the best loans will get done, and the bar will keep being raised.
4. We’ll see a 12-14%  one year decline in property values.
5. Refinance transactions (where 70% of the problem loans originated) will be capped at 80% for any type of cash out.
6. FHA/VA will be all that’s left for little-to-nothing down in most areas.
7. Transactions will be down 35%.
8. Fee offered to us brokers will be reduced to 1-2% or $2500 bucks per transaction if we are to remain price competitive. Lenders still want the best of the loans from us, but not badly enough to overcompensate.

Exceptions apply, but this is the future.   What do you see the near future doing?  Is this accurate?

Last 3 posts by Chris

• Some Economics of Wholesale Lending: Yet another Reason Why it's a dead man walking. - January 14th, 2008
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