Archive for May, 2009

On the Road with Jim …. In Tampa

May 12, 2009   Posted in Uncategorized | No Comments | Email This Post | Print This Post

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All economic recoveries are local!

Recently, I had the pleasure of presenting “Online Lending Breakthroughs” at the ABA’s Annual Real Estate Lending Conference held in Tampa, FL.  My presentation, sponsored by a long-time client, Mortgagebot, LLC, showcased three banks that have been highly successful with online mortgage lending.  While in Tampa, I also attended sessions and networked with bankers.  I’d highly recommend the ABA RE Lending Conference to you – great content, solid speakers and valuable networking.

Dr. John Silvia, Chief Economist, Wachovia Corporation, delivered a highly informative economic message to the group.  Dr. Silvia, tasked with delivering a tough topic – economics – was easy to understand, direct and provocative.   Here are my thoughts as a result of his message:

  • A positive GDP is forecast for 4Q2009.  However, and this is a big However, the recovery will vary widely from state-to-state.  Some communities will spike at 20% unemployment while others will barely break 6%.  Some local recoveries will be extremely soft and slow – others more rapid.  My takeaway is that economies are very much local. It’s important to follow the national and state economic numbers, but it’s essential to follow your market’s economy.  That’s what matters most to you as bankers.
  • Dr. Silvia used the word “tricky” multiple times in his presentation, confirming what you already know – this recession is the most difficult recession to understand and predict in our lifetime.   The duration, severity and permanent changes are still largely unknown.  Bankers and lenders must be cautious until the market recovers to avoid big problems.
  • The economy is undergoing permanent structural changes in major business sectors, including financial services, auto, retail, health care and education.  Bankers have to plan for a new economic reality for their retail and business customers.  Local auto dealerships will close.  Retail chain and local independent stores will shut their doors.  Newspapers will fold as more readers obtain their content online.  The rules for success for many industries are changing forever.  This will affect loan underwriting, loan concentrations and deposit and loan activity.
  • Inflation may become the next big economic issue.  The recent moves by Treasury and the Fed to flood the market with dollars, the proposed federal budget, huge deficits and the demands by China and other countries for higher risk adjusted yields will drive up interest rates, trigger inflation and raise mortgage rates.

Speaking of lending, what’s happening with bank’s mortgage application volumes?  The positive piece of information I learned talking with lenders is that many bank’s mortgage departments are working overtime again, handling a huge inflow of refinances.  Lenders are seeing up to four to six times the application volumes they saw last year.   Consumers have turned back to the banks.  And, there is no substitute for low rates to drive volumes!

About Jim Jones

James D. Jones, a national speaker for 16 years, has presented to financial services and mortgage audiences for organizations of all sizes.More >

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