Don’t get too comfortable with the recovery (yet)!

Picture this, if you will…

You are on one of your two winter vacations, smoking a wonderful cigar on the ocean-view balcony of your state room.  Needless to say, you’re very happy with the world at the moment–especially with your mortgage business. You tell your wife (or husband, or partner, or dog, or whomever) that everything is wonderful. It’s then that she (he, etc.) asks you if your business will continue to make the money which has enabled you to live The Beautiful Life. Well, rather than answering her, put out the cigar and start looking at the world without your false sense of security.  I’ve said it before, and I’ll say it again:  the trees don’t grow through the clouds.  What goes up will eventually come down.

Now, I’m not trying to be a downer.  The past year has been a welcome relief for lenders and many brokers after years of struggle.  And not everyone gets to take two winter vacations!  But I am noticing a palpable sense of satisfaction–almost a belief that “we’ve made it.”  Contrary to an increasingly popular opinion, the next coming of the housing market we saw in 2004 is probably not just around the corner.  In fact, we don’t really know exactly what IS around the corner. We still have some bumps to get over.  And I strongly believe that now is the time to prepare for any choppy patches that may lie ahead.

Just think what will happen to your refi business if rates go up (and, eventually, they will) or if the Fed discontinues buying bonds (they will). The proverbial 2000 year old man once said that “fear is the chief mode of transportation”.  It can certainly be a powerful motivator.  I am not suggesting that lenders and brokers run for their lives by any means.  But I am suggesting that we have a chance (for the first time in quite awhile) to get ahead of the game a little bit.  Get your chief managers together as well as your outside advisors.  Start building an action plan that will get you through the next down market.  We live in a floating market society:  what goes up eventually comes down.  So get to work!

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