Very interesting, John Meussner,  and not really a surprise in the current market. With rates up, there are fewer refinances and fewer purchases...thus fewer mortgages.

If there is any doubt about how it is affecting the mortgage industry, check out this very recent article - Mortgage Company Problems. Scroll down to the VERY LONG LIST of lenders laying off employees, and lendes closing down or being closed down.

And why planning and saving are essential. When the drought years hit, and they always will, we need reserves to keep the lights on. 

I had no idea that is the case, and sorry to hear that actually.  Losing money is not a good business model for anyone. I trust that your practices are designed to avoid the "average".

Banks are not in business to lose money. Somewhere they are making up for it.

I did know that was possible. Thanks for educating us.

gotta have volume to make money in that business.... it's a numbers game and some years are profit and some are loss.

must be why my banks stocks are down.

You are correct, John, one of my favorite lenders agreed with your statement!

Thanks for sharing, no idea this was possible.

I had no clue John Meussner . I assume that would be in the initial year and not over the life of the loan if the loan is kept "in house". Would they still have a net lose after selling the loan?

The high cost of living, making a living and running a business is no respecter of persons, places, or things. We need a reset & if not, What?

I didn't know this John. Thanks for the information. 

Interesting information. How do they stay in business? 

Tomorrow marks the 36 year anniversary of the largest stock market crash since the Great Depression.  I was working as a residential real estate lender for a midwest bank as part of their CA presence in the CA mortgage market.  I had just left Security Pacific National Bank (at the time, the country's 6th largest) and we had fixed rate loans compared to the flagship product of ARMs from our competitors--Home Savings and Great Western Savings.  Anyone remember those three???  Anyway, when the market crashed, our fax machine went nuts and we raised rates 3 times that afternoon.  It was crazy.  Not one of our loan agents had their phone ring for the next 30 or 31 days...  My takeaway was to always try to keep your pipeline full.  The stock market did a rather quick recover (I read somewhere it was back to where it was pre-crash within about 150 days; so never panic).

Yes, mortgage brokers and bankers can lose big time with their credit line fluctuating rate and sale of loans into the secondary market. It is a science of lucky guesses in an uncertain world. Nobody rolls the dice correctly every time.

Sorry to hear this John, what is the solution?  Raise the price that they charge, or cut the cost of buildings, salaries, and other tools of the trade?

I did not know that.  It sounds like a pretty cutthroat business.

I am not surprised.  With the refinance market gone, there are fewer ways for lenders to make money today.  Tough times for many.

Yes, I heard that recently. I also heard many lenders will be leaving the business since both purchase and refi business have decreased. It's a crazy time. I'm hoping something changes for us all.

John Meussner - Thanks for the education on "mortage lenders LOSE money." I recently thought about this, but not in the depth you explained. In a recent listing, the Buyer's Agent had a qualified Buyer from a reputable mortgage lender. Eight days before closing the buyer switched lenders. It did close successfully, but even though it wasn't my client, or a lender I knew who lost, I was sick about it and my heart strings pulled for Lender #1. 

As many others have said, I didn't realize that.  In hindsight, though, we all should have known it.  It's just like the real estate business - some years are good, some are bad.  You have to save in the good years to make it through the bad years.

Thanks for sharing, John Meussner .

And when agents send you a challenging buyer or one who has been to multiple other lenders, there is also money and time lost. 

Wow John, I did not know this but I know one of my lenders only has two people in his office anymore.

That totally explains why so many lenders are going out of business these days and couple that with fewer mortgage applications... we can expect more to disappear.

I knew things had slowed down but didn't realize it was this bad.  Thank you for enlightening us, John.    I hope things stay busy enough for you.   

Interesting. I had an impression that the lenders&bankers are there to make good money. 

I was not aware of that statistic, John but, it really drives home that point that planning is everything. Those who fail to plan, do indeed, fail.

Loss leaders, every business has something that's comes with the territory and there are plenty of income trails to offset if a lender runs a tight ship. Cruising their facility looking for slack.