Posted by JanetK_CA on 1/5/10 3:18pm
Msg #316783

A perspective on our business

I'm going to take a risk of being slammed for being negative, but I've been wanting to comment on a certain attitude about our business for some time in the interest of maintaining some perspective.

Lately, I've seen lots of people referring to the "slowdown" or "slump" in our business and I think this is possibly misleading and potentially harmful for long-term planning for those who haven't been around for long. I don't consider myself an expert nor do I have time to research this or elaborate on this, but others will probably chime in their 2 cents.

It seems to me that, to a large extent, our business is driven by interest rates, especially where refi's are concerned. The lower the interest rates, the more attractive it is for borrowers to refinance. For some time now, we have seen historically low interest rates. This also makes it more attractive for people to buy homes, impacting purchase deals, as well. But at some time, it is as inevitable as all business cycles are, that rates will eventually start going back up.

To oversimplify a bit, the "refi-mania" that caused the boom in the loan signing business in the early part of the last decade (sounds weird to say that...) was the aberration, NOT the norm! When people here talk about things getting back to "normal", I suspect that they sometimes have things backwards. What we are calling a slowdown may really be more like getting back to normal. Unless someone is moving or getting out of an ARM, they don't have much incentive to refinance again. Add to that that the numbers of signing agents (competing for a smaller volume of work) has increased - sometimes to a great extent, even after considering attrition - and it looks like current conditions may be closer to the new "normal" than the times we look back on with fondness...

It also seems like more and more of our colleagues here are pursuing this as a part time activity. So the business has changed. I just think this is something that we all - especially newer people - need to keep in mind when setting long term plans for ourselves and our businesses. This will vary by market and by individual (we all have different needs and skills), but I believe that those who see the big picture and plan accordingly will be much better off in the future.

Reply by Ruby on 1/5/10 3:27pm
Msg #316784

Amen to all you have said. Seasons change

Reply by Jim/AL on 1/5/10 3:27pm
Msg #316785

Re: A perspective on our business, well said Janet. n/m

Reply by MW/VA on 1/5/10 3:32pm
Msg #316789

Re: A perspective on our business, well said Janet.

Ditto--well said, Janet.

Reply by mwm143 on 1/5/10 3:44pm
Msg #316793

I agree with you. The subprime boom put a lot of $$ in my pocket. Then there was a lull until those in ARMs began to refinance and there was a second boom. The last boom as I see it was after the rates rose a little and then dropped back down and those consumers who were holding out for that 3% rate (yeah, right) got real and refinanced. My work has been consistent since Spring. Knowing that inflation will hit sooner than later and rates will rise once again is all the more reason to have a Plan B.

Reply by Richard Ingram on 1/5/10 3:51pm
Msg #316795

Janet,
I agree with your perspective on our business and that real professionals will survive.

Reply by Notarysigner on 1/5/10 3:59pm
Msg #316796

Although I am too new to have experienced the 'ol times as a signing agent, I like the perspective you offer. I will add that from a consumer standpoint (I have refi 'ed a number of properties over the last 20+ years), things have never been better, ah here. IMO Thanks Janet

Reply by Richard Goodwin on 1/5/10 4:34pm
Msg #316806

I think you also have to consider the depressing drop in the value of homes. We have seen in some markets decreases of 20% or more in home values. This removes many people's ability to refinance when they are already at an 80% loan to value. Once the economy recovers and more people are back to work, the values will go up and people will be demanding HELOC's and perhaps refi's.

Reply by Laura_V on 1/5/10 6:34pm
Msg #316829

Super terrific post

Just added it to 33325.

Good on you, Janet!

Reply by Claudine Osborne on 1/5/10 9:09pm
Msg #316844

Re: Super terrific post

Janet, Wonderful post. I agree with you.

Reply by Pat/IL on 1/5/10 9:26pm
Msg #316847

What's Normal?

I think it's going to be tough for anyone to predict what the near term future holds. Aside from Richard Goodwin's astute observation, there are other factors that lead me to wonder whether things will be back to historical norms any time soon.

The early half of the 2000s was not the norm at the time. Before then, rates had wider fluctuation and people refinanced for lower rates or to get out of the FHA or VA mortgages and the PMI payments. Things became abnormal when the Fed began holdiong rates down artificially and people began refinancing to gain access to the equity created by the rapidly heating housing market.

Now it looks like the interest rates will have to rise. For the period that the rates are rising, I hope buyers will see the writing on the wall and will get off the fence and buy while the values are low.

When the values begin to slowly rise, and the rates eventually decline (by the old rules) maybe then things will get back to normal. Normal being regular cycles, rather than a few years of frenzy and chaos followed by collapse.

Reply by Joan Bergstrom on 1/5/10 11:26pm
Msg #316859

Re: What's Normal?

When I got my 1st commission in June 2002 the refinance market was probably as normal as it got in the last 8 years.

Interest rates didn't decline until 2003 and I remember one of the most important tasks I had to do was to collect the cashier check from the borrower(s) so they could refinance their home.
If they didn't have the average ($2,500-$3,500 cashier check) I would have to call the company and see if I could continue with the signing?



I was constantly taking borrowers to the bank to get a cashier check, (additional fee was negotiated between the company and myself usually $50) if the signing was in the daytime.

If the signing was at night I would address a FedEx or UPS envelope so they could get a cashier check tomorrow when the banks were open and they could drop off the envelope. I was expected to carry FedEx/UPS envelopes with me at all times.

There weren't foreclosures, helocs, and certainly not loan modifications in 2002 that I dealt with and I doing refinance signing almost 100%.

By mid 2003 I never picked up another cashier check until 2008.

These are some of my experiences in CA and I imaging other notaries had different experiences in other states.

Also all docs arrived at my front door step via FedEx or UPS.

By mid 2003 if you weren't printing edocs you were pretty much out of the loan signing business.

I teach people to pass the CA state exam and there are very few notaries who are interested in becoming loan signers.

We will probably lose another 30,000 notaries in 2009 as we did in 2008 and it could be more.

I stay busy but I work harder than ever and market all the time.

Reply by ReneeK_MI on 1/6/10 5:02am
Msg #316863

A good dose of reality, Janet!

The refi index of 2002-03 was 5 times the historical index - definitely an anomaly. Not only is it not likely to ever be repeated, it would be my HOPE that it will never repeat - as it was an integral part of the economic collapse.

I also think we need to consider things that can't be graphed - the dynamic shift in the way we think, the effect of a long-term recession on the psyche of America. Used to be that housing value appreciation was a 'given' - and I really don't think people still hold that to be a given anymore (ya think?!) Perhaps one of the effects of the last decade will be the swinging of the pendulum back towards a 'pay cash or save' mentality. We've had 10 years to reconsider things we'd held as true, and perhaps most Americans have been personally touched in ways that they don't want to repeat.

Those who could refi into a lower rate over the last 10 years have likely done so (at least once). Those who are buying into the housing game now are buying in low. Housing values are possibly never going to reach the high appreciation rates that we now know were artificial, and lacking that factor - well, 2003 is long gone, and good riddance.

Maybe ...just maybe, as we eek our way through towards 'recovery', the collective mentality of Americans will realize that refinancing every time the rate drops is NOT always a wise financial move; that resetting the front-loaded interest back to "Go" every 5 years or so didn't exactly work.

I do think - and hope - it's a Whole New World. =)

Reply by JanetK_CA on 1/6/10 1:42pm
Msg #316952

Thanks for filling in the blanks! :>) n/m

Reply by Joan Bergstrom on 1/6/10 10:04pm
Msg #317059

I think the lower interest rates were in 2003-2004

I don't think 2002 was the year when interest rates were lowered.

Reply by ReneeK_MI on 1/7/10 12:39pm
Msg #317148

I didn't reference the rates, Joan - just the index

The rates & the index don't always go hand-in-hand, as we see right now (low rates & few refi's). I was speaking of the major portion of the 'refi-boom', and by 2003-2004 we were getting into the 'Mtg Implosion' Days (in spite of, or to spite the rates!)