Oct
26
The mortgage banker’s lament
Filed Under Sunrise on KGMB9
This week I spoke to a meeting at the Sheraton Waikiki of the Mortgage Bankers Association of Hawaii. They’ve invited me before and I like them — they’re a good crowd, ask intelligent questions, and don’t get upset if I express an opinion they don’t agree with.
They were just a nanodegree less ebullient this year, though. They feel like people are lumping them together with the predatory lenders who created the subprime mortgage crisis by hard-selling loans to people who can’t afford them.
There is some sentiment in the mortgage community that there are some people who always pursue the quick buck, who got into the mortgage lending business when they realized they could game the system by pressing borrowers to put down more income than they actually had.
This is the same kind of person who a generation ago were hard-selling maginal high-tech IPOs as if each one was going to be the next Microsoft.
Jeff Booth’s birthday this week was also the anniversary of the Great Crash of 1929, which came about because of similar people. They sold stock on margin to people who didn’t know what they were doing, having first persuaded themselves that everything was going to be fine indefinitely.
The two lessons from this. The first is that there will always be a quick rich scheme that works for a while and then doesn’t. The second is that the next time it will be something different from last time.
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