Small Business | Michael R Lewis, ASJA

November 22, 2013January 3, 2024

Does the Bell Toil for Independent Mortgage Brokers?

This article first appeared on NationalMortageProfessional.com on November 18, 2013.

To paraphrase John Donne’s famous line, “Don’t ask whether you will be affected by the ongoing changes in the mortgage market—you will be.” The recovering but still nascent U.S. economy, the assault upon former industry practices and the uncertainty of the government’s future role in residential housing will severely challenge the capability of large wholesale correspondent lenders to adapt to the new market conditions.

According to the Mortgage Bankers Association’s (MBA) 2012 year-end forecast, overall mortgage volume is expected to drop from $1.7 trillion to $1.08 trillion in 2014. In addition, the ratio of refinance to purchase mortgages will essentially flip-flop, as refis decrease from 71 percent to less than 35 percent of total new mortgages in 2014. Since the bulk of refinancing occurs in the Big Four (Wells Fargo, Citibank, JPMorgan Chase, and Bank of America), they will be hurt to a greater degree by the product shift than their smaller competitors. In fact, the lower volume and the fundamental structural change provide extraordinary opportunities for independent local and regional mortgage competitors to prosper.

Pressures on the Big Four

According to a 2012 study by Harvard Business School professors Robin Greenwood and David Sharfstein, the growth of residential mortgages from 34 percent of the gross domestic product (GDP) in 1980 to 79 percent of GDP in 2007 was spurred by the tremendous profits in the financial industry from fees, as well as the growth of a “shadow banking” system with loose or non-existent regulations.

The subsequent failure of the sub-prime mortgage market and resulting loss of confidence in the larger financial entities to self-regulate have had several results:

For Inventors: How to Monetize Inventions (Financial Arrangements)

This article first appeared on IPWatchdog.com on November 9, 2013.

As any viewer of “Shark Tank” can attest, the variety of financial arrangements which are negotiated between inventor entrepreneurs and investors is broad. A final agreement is always the result of negotiation between the two parties. Unfortunately, many inventors go into the gunfight with a knife, so to speak, over-matched and under-prepared.

Unless you are a veteran of previous negotiation and thoroughly understand the potential value of your invention, you would be wise to engage the services of an attorney and/or a firm who has previously negotiated financial transactions for similar inventions. You don’t want to leave money on the table, nor do you want to have an unrealistic view of your work. Expert assistance can help you avoid either outcome.

The following descriptions are by no means exhaustive, but represent a sample of the strategies you might employ in order to monetize your work:

How to Prevent Identity Theft and Protect Your Personal Information

In 2013, Americans were shocked to learn that the National Security Agency conducted mass surveillance of its citizens by intercepting and monitoring Internet and phone traffic within and outside of the country’s borders. When challenged, government officials justified the collection on the basis of national security and ongoing threats of foreign terrorism within the U.S., believing these threats to be aided by both American citizens and foreign nationals within the country.

The disclosure ignited a debate between those advocating the need for the government to access such information and those who deem such acts a violation of the Constitution’s Fourth Amendment and an implied right to privacy. Whether the program is going be modified in the future remains uncertain.

The Risk of Identity Theft

The surveillance incident follows a growing concern for many about the possibility of their identity being stolen. Identity thieves have the potential to plunder bank accounts, run up credit card balances, and perpetrate malicious mischief on innocent people or in their names. According to a recent report based on data from the U.S. Department of Justice and Javelin Strategy and Research, about 11.5 million people are victims of identity fraud each year, with total financial losses of $21 billion. The personal stress and inconvenience suffered by victims is incalculable, to say nothing of the effort required to restore their good name and credit after the fact.