Long Beach, Ca.  The market is like the wild.  Only the fittest survive to fight and live another day.  Not to take away from the efforts or history of any great company; the fact is, everyday we are vulnerable and responsible for every decision we make whether it is corporate or personal. 

The fact that America's biggest Mortgage Lender, Countrywide, just got bought out by Bank of America is further evidence that if a company and its directors do not make the right decisions, they and their apparatus will be gobbled up by the market.

The real reason for the fall of the Mortgage giants like Ameriquest, Countrywide, Novastar, and New Century can be summed up in one word:  Greed.  This is the unfortunate human trait that corporations often emulate that demands more and more and is satisfied with less and less.

In short; first, the entire market loosened up by the Fed with cheap money back in '02-'03 resulting in massive consumer spending and home buying which resulted in record home appreciation.  This appreciation continued over years and the mentality was that it would never end.....nail in the coffin.

Then mortgage bankers learned they could separate themselves from the risk of the shoddy loans that they were originating by selling them off to Wall Street in the form of collateral debt obligations.  This was the real, "inconvenient untruth."  For the first time in history, the faster and looser mortgage bankers could sell paper, the more money they could make without risk, which begged the question:  How could they lend even more?  Mortgage companies were making hundreds of millions of dollars setting up this dangerous house of cards off of originating, selling, and servicing the boon in loser loans.....another nail in the coffin.

Several more years go buy and suddenly those sub-prime loans interest rates started to adjust upward.  Thousands of families could no longer afford to live the American Dream turned nightmare when their payments went up over one thousand dollars a month.....hammer away.

One day back in 2006, Wall Street started to actually read the returns on their coveted mortgage investments and suddenly realized that the default rates were rocketing into space.  The word spread quickly and the demand for mortgage back securities in the sub-prime markets evaporated, but too late: billions had already been lent out and somebody was going to take it on the chin.  At first, the same mortgage companies, laden in denial, just continued to lend out their own money from their own credit lines until the commercial banks cutt them off too!  Oops.....Put another nail magazine in that air gun.

Fast forward to our marketplace in 2008:  A credit crunch so big and tightening everyday is a natural reaction for banks.  Putting the blame on mortgage brokers is very convenient but not realistic.  Mortgage Brokers just took the path of least resistance and sold the same miracle loans that were being pushed by the greedy banks. Now, the question is how will Countrywide be integrated into Bank of America?  Both companies seem like opposites and frankly, that is their problem.  Countrywide itself, will more then likely be downgraded and broken up into different parts......bugle play Taps. 

We mortgage brokers will give Bank of America a wide berth and focus on our own proven methods of originating and funding loans.  Survival and prospering in the new market dynamic will determine who will be around for the next ten years.  I can assure you, responsible mortgage professionals will be there shoring up the market, and not just surviving but prospering!!!