There is a lot on the news lately about the sad shape of real estate and the mortgage industry. 

Sadly, a lot of it is being published by people who have NO idea what the industry is about.  There are many points to make about the current state of the industry.

1. It was inevitable that a market correction would occur.  It occurs in EVERY investment opportunity.  The stock market is making a correction too.   However, the cycle of correction generally tends towards two steps forward and one step back, making the net over time POSITIVE!

2. Private investors FLOODED the market with money for mortgages when the real estate "boom" hit.  These investors were anxious to cash in on the mortgage industry.  This lead to some loans being made that should not have been made and of course, money will be lost because of it.  HOWEVER, remember that mortgages, especially subprime mortgages are FRONT loaded.  In other words,  They come with their share of FEES and costs to generate the loan (the buyer pays that up front a lot of times) AND the interest on a mortgage is amortized in such a way that you pay PRIMARILY interest the first 10 years of a loan.  So while it appears the mortgages that are being foreclosed on are still where they were when they were made,  remember that money was made along the way. 

3. The sky is not falling on the mortgage industry...it is simply returning to what we once had.  A lot of companies are getting out of the mortgage business and taking those investor dollars somewhere else.  It might be the stock market or it might be government bonds or it might be GOOGLE for all we know...but it is simply a movement of the dollars available and not really a collapse of the industry. 

4.  Many of the companies that have been around for over 10-20 years, will continue to be there...many of the companies that were there to cash in on the boom, will be gone.  What does that mean?  It means, as a real estate agent, and especially a NEWER agent in the business (which by the way, many, many agents will be leaving the business over the next year),  you better align yourself with a mortgage professional that understands how the mortgage industry works and not just how to do mortgage paperwork.  That mortgage professional will become KEY in going from private investor funds and returning to FHA and VA loans that we've had for many, many years!

So what is the net effect on the mortgage industry to the consumer?  It means that now there will be more regulation on funds.  It means that the average home buyer will HAVE to bring money to closings and they will need up to 3% to close their mortgage.  It means that the mortgage industry is NORMALIZING again.  Does it hurt?  Yeah it does.  Is it fatal?  Not a chance.  People will still get married, people will still get divorced, people will be born, people will die, people will get promotions, people will get fired...all those people have changes of circumstances in their lives and because of it, they will buy and sell houses. 

Are you going to be one of the professionals left after the Chicken Little scare?   If you are,  your buyers and sellers will ultimately need you more than they have in the past 5 years or so because for many, it's time to go back into uncharted waters...for those that have been around a while, it's back to business as usual!