Thanks, Mortgage Professionals, for a Job Well Done 

by Charlie Elliott

 

Anyone who has been reading this column realizes I don’t think all is perfect in the world of the mortgage industry and how it relates to that of real estate appraisal. In fact, I have often used this space to point out problems that exist and offer solutions to help solve them.

 

I hope these “suggestions” that I have been offering don’t give people the wrong impression of my true feelings about the mortgage industry in this country.

 

In an attempt to be fair and balanced, this column will be dedicated to a salute to the Mortgage Industry.

 

Obviously, those of us in the real estate appraisal industry appreciate your business, and it has been good these last few years, but my appreciation of gratitude goes well beyond that.

 

I feel that your industry has saved our economy.

 

I would like to thank the mortgage professionals for a job well done. The economy as a whole hasn’t been the best these last few years, but, ladies and gentlemen of the mortgage industry, where would we be without you?

 

I don’t think it’s any secret that low interest rates have definitely helped the situation. In that regard Alan Greenspan, chairman of the Federal Reserve, deserves a tip of the hat for his effort in keeping interest rates low. And yes, the construction and real estate industries have benefited from this. But, I feel that it is you, the mortgage professionals, who have made all this come together. You took the ball and ran with it by making the most of your opportunity.

 

Let’s look at some numbers here. Alphonso Jackson, Secretary of Housing and Urban Development and Alicia R. Castenada, chairman of the Federal Housing Finance Board, have been emphasizing the following statistics recently:

 

• The housing sector in this country represents a remarkable 14% of the U.S. GDP. This includes mortgage brokers, mortgage lenders, bankers, appraisers and other real estate professionals, as well as builders.

• For every 1,000 single-family homes built in this country, 2,500 jobs are created. This translates to $75 million in wages earned and $37 million in tax revenues generated.

• Today, almost 70 percent of U.S. residents own their own homes, and that’s the highest percentage in history. Another record is that, for the first time ever in the United States, more than half of minority families live in their own home.

Like the rest of you, I still have vivid memories of the morning of September 11, 2001. I was sitting in my office talking to one of my appraisers when another employee came in and said, “Did you hear that an airplane crashed into the World Trade Center?”

 

I thought it was a private plane he was talking about, and, of course, that, in itself, was shocking news. I have a radio in my office, which I quickly turned on. That’s when we found out that a second plane had crashed into the other tower at the WTC. We listened helplessly as the buildings crumbled. Eventually the airline industry and tourist industry crumbled also.

 

Let’s not give these evil terrorists the entire credit for the downturn in our economy. In the mid-to-late ‘90s the stock market had been riding on a dot-com craze that turned out to be surreal. When reality struck and these dot-com outfits that were undercapitalized and draining cash despite their lofty stock prices went down like dominoes. Furthermore, as our economy has become more global, which is not good for our manufacturing industry. More and more goods are being produced overseas where labor is cheaper, causing a further loss of jobs. Even some services are being outsourced to companies in foreign countries, striking a further blow to our job market. The loss of employment, of course, leads to the lack of disposable income to displaced American workers, further complicating this problem.

 

There are other negative factors complicating the matter even further, but guess who has come to our rescue – you have, mortgage professionals! While the interest rates have been low, you folks have been much more than order-takers with a low profile. You have, as a whole, marketed your product well and encouraged Americans to take advantage of it.  And, it’s a good thing that they have.

 

The numbers, quoted above by government officials, only tell part of the story. While they represent houses being built, they don’t include existing houses being sold and what that does for the country’s economic well being as a whole. Furthermore, it doesn’t include refinancing. I realize that the refi boom is, for all practical purposes, over, but aren’t we all glad we had it! Even Americans who didn’t (or have yet to) take advantage of this low interest opportunity to gain some cash equity on their home benefited from this.

 

Yes, I, as an appraiser and appraisal company owner, appreciate the business that we have been able to generate from the mortgage industry in recent years. But even more importantly, I as an American appreciate the way you rode in on a white horse and rescued our troubled economy.