Conventional wisdom: here is some of what was heard and seen in Boston during the annual convention of the Mortgage Bankers Association

Mortgage Banking, Dec, 2007 by Louise L. Schiavone

The Boston air was crisp, the sun was shining, the leaves were turning, and the anxiety was everywhere. Mortgage bankers and others tied to the mortgage business gathered for the annual convention of the Mortgage Bankers Association (MBA). [??] Nervous executives peeled off into little groups, their hands wrapped around cups from Dunkin' Donuts or Au Bon Pain, sharing horror stories about the battered mortgage market. [??] There were lots of interesting speeches inside--one, in particular, from a man sporting the best-made suit you have ever seen in your life: rock star and championship global activist, Bono. "I came here to enlist you in saving the world," he told well over 1,000 people gathered for a general session. "But most of you are not in a 'save-the-world' state of mind, right now, are you? It's hard to think about saving the world when you have to think about saving your shirt, saving your home. Americans who wake up to find a pink slip or a foreclosure notice are not likely to spend their day thinking about Africa or America's role in the world," he said. [??] Having suffered through a mediocre to horrible year, and expecting worse, the executives gathered at the Hynes Convention Center in Boston were hearing and using terms like "mortgage market crash" and "credit meltdown." The message from industry leaders: 2007 was a rough year for the housing and mortgage businesses, and recovery is still not around the corner.

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Doug Duncan, chief economist for MBA, delivered this message to the media: The full impact of global credit shock has not been felt yet. With foreclosures everywhere, credit and spending tight, and home prices down, Duncan is convinced a turnaround may not materialize until 2009.

The amount of new mortgages made in 2008 will be under the 2007 number by 18 percent, Duncan predicts. The year after should see another 6 percent decline. And, by extension, jobs inside the industry are evaporating.

For those gathered in historic Boston for the year's meeting, headlined "Revolutionary Times: Making History," it might have been well to remember the pain and near-catastrophe of the Revolutionary War. And from the sound of it, the mortgage industry's version of the rough winter at Valley Forge still lies ahead.

MBA's outgoing chairman, John M. Robbins, CMB, co-head and special counsel of Vertice, a division of Wachovia Securities, in San Diego, struck a defensive note in his opening address to his colleagues. Clearly offended by media accounts of the mortgage industry situation, Robbins insisted the mortgage industry is indeed reaching out to borrowers in trouble, and had created the Home Loan Learning Center (www.homeloanlearningcenter.com), with its The Simple Facts feature, getting more than 1 million hits a month.

But even Robbins admitted the industry had abandoned its underwriting discipline. Another troubling development is the high percentage of adjustable-rate mortgages (ARMs) now outstanding and about to reset. And he noted the overall economy was making payments on loans of all types an upstream swim for thousands of mortgage holders. Depressed economies in Michigan, Ohio and Indiana are adding fuel to the fire. And, Robbins said, "California, Arizona, Nevada and Florida saw unheard-of home-price appreciation, which in turn attracted an unhealthy percentage of speculators."

Robbins' prediction, after a year that he described as intense and frightening: "We have still not seen the bottom of the housing market. Legislative and regulatory perils remain. Hundreds of thousands of loans are about to reset."

Surely, one might think, the new MBA chairman, Kieran P. Quinn, CMB, chairman and chief executive officer of Column Financial, Atlanta, might be a bit more upbeat. Actually, no. In his view, there's an odd synchronicity between the rough early record this year of Notre Dame's "Fighting Irish" football team and the housing market.

"They have never started a season o and 5.... There has never been a year like this before. Not for Notre Dame. Not for the housing market. Notre Dame hasn't looked like this in 120 years. And home prices haven't gone down since the Great Depression. We are in uncharted waters," said Quinn.

Ask the businesspeople working the three expansive floors of Boston convention space how it's going, and you get a mix of responses--sometimes from the same person. In the Florida retirement community served by John Davis, president of Citizens First Wholesale Mortgage Co., The Villages, Florida, it's been "a real good year, considering. A very good year," he says. Seriously? In this rough environment? "What I said was, we had reasonable sales," Davis clarified.

His clientele is people who, for the most part, have been managing their estates to prepare for retirement. So it's not exactly a reflection of the general marketplace. Unlike Fort Myers, Florida, for instance--"that whole area is devastated," says Davis.

Still, at The Villages, Davis acknowledges sales were way off from 2005 and 2006, "like they were for everybody else. But we're doing way better than a lot of other folks. We know that, and we appreciate that," he says. Davis says there are still a few challenges at this juncture: "No. 1, selling the home. The other is selling at the price the seller wants. And there's still a little intractability there," he says, adding, "although it's diminishing and waning slowly." Then there's the issue of stock-market shock "when this whole thing unfolded. It was a little paralytic, and people stopped making big decisions--they slowed," he says.