This week National Mortgage News completes its 34th year of publication and then commences its 35th. That makes it a good time to reflect both on the past, but more importantly, on the past as prologue to what is to come.
NMN got its start in 1976 as National Thrift News, targeting the then-biggest class of mortgage originators, savings and loans. This was actually at the tail end of the golden age of thrifts, who subscribed to the safe, dull and profitable 3-6-3 formula: make loans at 6%, pay deposits at 3% and be out playing golf by 3 p.m. (Interestingly, those would be premium rates on both ends today in our deflated, at least on the mortgage end, economy.)
That all came to a close in the early 1980s when a huge jump in interest rates caught thrifts seriously mismatched between lending long and funding short. Thousands of them failed in the early 1980s, and many of the rest foundered at the end of the decade, when an ill-conceived deregulation opened the doors to crooks and gamblers of every stripe. The savings and loan debacle cost taxpayers several hundred billion dollars, a lot of money at the time (it is dwarfed by the current collapse).
As the market shifted to mortgage bankers and brokers, we became National Mortgage News and continued to report on what has always been an interesting industry. The 1990s saw the huge growth of Fannie Mae and Freddie Mac into mortgage behemoths who took a lot of air out of the room. Their inventive technology, like automated underwriting, helped spark a technology boom which roughly matched the Internet craziness of the general economy, resulting in the bust that everyone knows about at the turn of the century.
In this decade, the industry reinvented itself yet again, with mortgage brokers and Wall Street mavens stoking the subprime mortgage fires that caused the latest boom and bust.
Now, in 2010, the mortgage business is eerily similar to the one three dozen years ago, as government lending, with Fannie, Freddie and the Federal Housing Administration, dominates the scene.
Does this mean we have completed one long cycle and will inevitably revisit the highs and the lows the business has seen since then?
It seems unlikely, but it’s impossible to say for sure. Servicing is in complete control of the mortgage agenda currently. It is safe to say that originations will return to dominance again.
