| Shifting trust to community lenders
Today, mortgage capital markets are suffering a historic liquidity crisis caused by a perfect storm of falling home values, a softening jobs market and a global economy weakened by rising energy costs. Companies that led issuance of mortgage securities have discovered that exotic instruments such as Collateralized Mortgage Obligations (CMOs) and Collateralized Debt Obligations (CDOs) are not "off-balance sheet" transactions. They loom large on the balance sheet, particularly when they are non-performing. In turn, mortgage bankers and their broker partners have been swept up in the turbulent wake, forced to repurchase questionable loans and scramble for mortgage capital The future of the mortgage securities market has been permanently altered. The time will come when the regulatory hounds will be unleashed and the demand for "transparency" will reduce many of the former advantages of securitization. Issuers will likely have to reserve capital, which will level the playing field between portfolio lenders and (Wall Street) conduits. Spreads will normalize, creating investment opportunities for portfolio lenders. And, yes, real estate housing will achieve equilibrium between real incomes and home prices. In other words, collateral will improve and yields will return. American consumers are disenchanted with the "power brands" of the past. They now want to deal with companies they're familiar with from first-hand experience. It's time for smaller financial institutions to come out of the shadows cast by large, commercial banks and Wall Street and leverage the trust they've earned with their constituents. Despite the recent upheaval, housing will always play a key role in the growth of the U.S. economy. More than ever before, American consumers need effective and responsible lending choices. More importantly they feel a need to trust their lender. For community lenders, mortgage products have always been and will continue to provide a powerful mechanism for broadening financial relationships with consumers. While the opportunity is not without risk, there are ways to manage the shorter term housing and capital risks as you build a mortgage presence in your local community. Why Mortgages? Why Now? Despite the recent upheaval, housing will always play a key role in the growth of the U.S. economy. More than ever before, American consumers need effective and responsible lending choices. More importantly they feel a need to trust their lender. For community lenders, mortgage products have always been and will continue to provide a powerful mechanism for broadening financial relationships with consumers. While the opportunity is not without risk, there are ways to manage the shorter term housing and capital risks as you build a mortgage presence in your local community. A Call to Action American consumers are disenchanted with the "power brands" of the past. They now want to deal with companies they're familiar with from first-hand experience. It's time for smaller financial institutions to come out of the shadows cast by large, commercial banks and Wall Street and leverage the trust they've earned with their constituents. |
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TOGETHER WE PROSPER, FIRST CAL DEALWORKS & Design, and FIRST CALIFORNIA MORTGAGE COMPANY are trademarks of First California Mortgage Company. First California Mortgage Company is an Equal Housing Lender and is licensed by the AZ Dept of Finance license # BK-0911115 and AZ license # BKBR-0115566, by the California Department of Corporations under the Residential Mortgage Lending Act, License #415.0042, Colorado exemption as a 1st lien lender per Colorado Credit Code, License #MB 1489, by the Hawaii Department of Commerce , License No. MBL.6849 –NMLS.24055, by the Idaho Department of Finance under the Mortgage Broker/Lender License Act, License #MBL.6849, by the New Mexico Regulation and Licensing Dept. Financial Institutions Division Certificate No. 03833, License #6849, by the Washington Department of Financial Institutions under the Consumer Loan Act, License #520.CL.50649, by the Oregon Division of Finance and Securities, Mortgage Lender License #ML.4894. Trade/Service Marks are the property of First California Mortgage Company. Prices and guidelines are subject to change. Restrictions apply. |
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