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Be careful who you snuggle up to in business

By
Title Insurance with Bell Title /Triserv LLC

Because you sometimes can be blind sided. Case in point, I had 2 clients this week get caught in a very tough situation because their national title partner filed bankruptcy protection on the afternoon of the 25th. This was a huge blo to their current production and they had genuine concerns. Fortunately we were able to help, but it underscores the importance of having strong relationships. You have to have some level of disclosure and trust to make sure they have the financial stability to make it through these tough times.

Most economists and economic forecasters agree that we are in for a very prolonged recovery. I have read everything from 6 months to 5 years. My opinion, I think we are looking at 2years. The sub prime assets are pretty much already worked out and have moved through the system accounting for roughly 50% of the riskier paper placed over the last 5 years. The other 2 trillion or so is going to come from the other risky and exotic instruments like Pay Option Arms, Teaser Arms, and similar programs offered to better credit borrowers that are just now starting to experience resets of their adjustable rate mortgages. In most cases they are seeing their rates go up 2 and 3 points resulting in payment increases of 20% to 100%. This round has the potential of being significantly more troublesome because of the fragile state of where our financial system is currently.

SORRY, that was an ugly picture I just painted.

My point is that the stability of many of our partners is going to be tested and no one is immune from it. Currently there are over a dozen medium and large banks that are in the hands of the FDIC, 1 very large title company just filed for chapter 11, 1 of the major mortgage insurance companies has closed their doors and literally over 300 lenders are gone.

The good news is that if you have made it this far, you are probably in decent shape. It is going to be hard as the dickens for another year or so and although there will always be exceptions, most of us are in a retooling and /or survival mode.

Your partnerships and network alliances are the exact remedy necessary to get you through this. Look for alliances with vendors that can bring synergies to the network Think out of the box and bring in people or companies that help maximize your current business model. If you find yourself in one of those relationships where one of the partners is showing signs of trouble or already are have an exit strategy in place.

You have a great resource here on Active Rain. It is always preferable to be prepared than get caught when it is too late to make the right move. This is something that we are all going to have to work together to get through.

Stay Sharp and good luck!

Your ActiveRain partner and national title agent,

Until next time my friends,


LEADING EDGE TITLE SOLUTIONS

Matching experience with technology to give

you the edge to be a mortgage industry leader

 

Bo Hussung

Vice President of Sales

phone ~ 615-438-7300 fax ~ 678-261-1594

email me ~ bhussung@cogentca.com

web ~ www.cogentca.com

 

Comments (4)

Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Bo. Great post! I agree with you. Sometime next year I believe the real estate market will start to rebound. Have we hit bottom? I think we're close. I believe the buyers will return to the market a little bit in the Spring. We're already seeing it in some markets such as Vegas and L.A. Things have actually gotten affordable again. Have a great Thanksgiving!

Nov 27, 2008 01:36 AM
Kevin & Maryellen Garasky
KMG Mortgage Group - Kevin & Maryellen, Idaho & Washington - Coeur d'Alene, ID
KMG Mortgage Group - ID & WA

Bo,

This is a great post.  Being a mortgage broker, we would often have Wholesale Account Executives come in and brag about their company's "stability."  One even bragged: "We'll never go under, we're backed by Bear Stearns."  He's now serving drinks at Chili's.

Slow and steady - that's our philosophy.

Maryellen

Nov 28, 2008 04:03 AM
Bo Hussung
Bell Title /Triserv LLC - Nashvle, TN

Paul, I always appreciate your comments and posts. Wishing you a happy thinksgivign as well...>Bo

Maryellen, that philosophy has to be applied to all our vendor relationships. Thanks for your comments

Bo

Nov 28, 2008 04:50 AM
Not a real person
San Diego, CA

Since I've always been a small business, I pretty much stay with small businesses. That way I get advanced warning when the owner retires, goes out of business, etc. I didn't have any advance warning with AIG, WaMu, Bear Stearns, etc. Good thing I wasn't with them -- LOL.

Personally, I don't think big is better. Big creates its own type of greed. Remember when the Courts broke up Ma Bell into seven Baby Bells? Where are those Baby Bells now? They've all merged together again. Interesting. Greed at its finest.

Dec 05, 2008 06:22 AM