Last week on my Lykken on Lending radio show, we were discussing the state of the industry and I heard some discouraging news. While some aspects of the economy are improving and there are signs of recovery, the number of foreclosures is still up. People are still losing their homes—so, the industry still has a long way to go when it comes to recovery.
When I hear data such as this, talk of loosening credit standards makes me nervous. As the current administration considers an initiative to allow more low income families to take on mortgages, people who are already in homes are still losing them. Is it really wise to permit low income families to take out mortgages when the most current data suggests existing homeowners are still struggling to manage the debt?
Don't get me wrong—I want to see an influx of homeowners just as much as anyone else in the industry. I just want it to be done the right way—a way that is healthy for our industry in the long run. Before we get more people into their homes, we need to keep more people in their homes. The number of foreclosures is a key metric that we should all be monitoring. When we see that number decline, we will know that the industry really is recovering. In my opinion, that is when I think we'll need to talk about loosening credit standards.
David Lykken is 40-year mortgage industry veteran who has been an owner operator in three mortgage banking companies and a software company. As a former business owner/operator, today David loves helping C-Level executives and business owners achieve extraordinary results via consulting, coaching and communications, with the objective of eliminating corporate dysfunction, establishing and communicating a clear corporate strategy while focusing on process improvement and operational efficiencies resulting in increased profitability. David has been a regular contributor on CNBC and Fox Business News and currently hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He produces a daily one-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites across America. He may be reached by phone at (512) 501-2810 or by e-mail at [email protected].